Thursday, December 25, 2014

Why the Federal Reserve Will Likely Feel Comfortable Allowing Price Inflation to Climb Far Above the 2% "Target" Rate

Dean Baker puts it succinctly:
In the United States, Fed chairs have been quick to note that it is an average, not a ceiling. This means that they could easily run an inflation rate above 2.0 percent for a number of years without violating their rule. 

Note: The entire idea of an inflation target is a dangerous idea (SEE: Is Milton Friedman the Direct Cause of the Current Crazed Fed "Inflation Targeting"?)

1 comment:

  1. Anyone who thinks the inflation rate isn't far above 2% at all times isn't paying attention to reality.