Thursday 3 November 2016

The Fed, How it should be?




This is a dilemma indeed, when the Fed wants to soon raise interest rates to curb inflation below 2% (approximate), but there is also the opinion that it is not time to do because it will suppress the financing that will reduce consumption, on the other hand it is still in the form forecast data (unrealized), in addition to the argument that the inflation target of 2% is not a realistic target that needs to be easing 2% more.
 
I agree with the last, which is reviewing the inflation target

It is also likely to be the fault of the developing countries and developed countries.

What is it:

  1. How much actual interest rate is optimal ? 
  2. How much actual inflation rate (the target) is optimal ? 
  3. How the actual exchange rate is optimal ?

So in this regard, you can not specify a target inflation as measured by the ability of the country, for example the unemployment rate, the market price of commodities and others. Because we also have to pay attention to stock prices, currency values, and others with fluctuations faster than inflation.

It could be 2% it is already above the optimum level of inflation or otherwise is still far below the optimum point.

Thanks (^_^)

No comments:

Post a Comment