All posts tagged Fed

There is no reason to worry – yet

The Fed announced the CPI for May: 0.6% is still at a fast pace. But I don’t think we should worry. The rates announced so far match Claudia Sahm’s predictions: If we look at the PCE index, inflation has started to made-up its dip in 2020, but this does not necessarily imply that tightening is […]

Can overshooting also cause recession?

In recent years, the Fed predicted inflation would be below the target. For a while, inflation remained below 2%. It has risen above 2% this year, and it looks like it will stay around for a while. Actually, this situation itself is not a problem. Last summer, the Fed switched to “average inflation targeting,” which […]

Are you worried about inflation? Don’t be

Last summer, the Fed switched to “average inflation targeting.” The Fed’s main goal is to ensure that the PCE inflation will average around 2% over the long term and that future overshoots will compensate for any short-term discrepancies. Although a starting point is not specified, we can assume that January 2020 is the beginning. Therefore, according […]

The Fed’s New Strategy: Tiny Steps Forward

Many experts seem to have mixed feelings about AIT. While some experts are sure that AIT will be disastrous, pro-free market economists tend to view the situation as a rejection of Keynesian Phillips Curve models. The paragraph that caught my attention in Powell’s speech was this: “Our revised statement says that our policy decision will […]