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Monday, October 16, 2017

Is The Fed Setting Itself Up To Fail In The Next Recession?

Tim Duy:


Is The Fed Setting Itself Up To Fail In The Next Recession?: The Federal Reserve remains committed to a December rate hike, persistent low inflation not withstanding. With unemployment below Fed estimates of its longer-run natural rate, most FOMC participants do not need evidence of stronger inflation to justify further rate hikes. Ongoing solid job growth will be sufficient cause for tighter policy, especially in what they perceive to be an environment of loosening financial conditions. The main risk from this scenario is that the US economy enters the next recession with diminished inflation expectations, which could further hobble central bankers already facing the prospect of returning to the effective lower bound in the next cycle. ...Continued here as a newsletter...


    Posted by on Monday, October 16, 2017 at 06:02 PM in Economics, Monetary Policy | Permalink  Comments (128)


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