Re:Banking in Uncertain Times
by vishnugupta on Wednesday March 15, 2023 @10:23AM
(#35168733)
> it would be trivial to stop and reverse inflation (i.e. deflate) with any increase in interest rates (?).
As trivial as it sounds it is exactly the premise with which fed operates. Their mandate is price stability (~2% inflation) with low unemployment rate. And interest rate is a key lever they have. So yes they are going to keep rising rates until they see inflation come down to around 2%. They harp on this at every FOMC meeting[1]. They believe raising rates to around 4.75% will bring down inflation to 2%.
As trivial as it sounds it is exactly the premise with which fed operates. Their mandate is price stability (~2% inflation) with low unemployment rate. And interest rate is a key lever they have. So yes they are going to keep rising rates until they see inflation come down to around 2%. They harp on this at every FOMC meeting[1]. They believe raising rates to around 4.75% will bring down inflation to 2%.
Will be interesting to see how it plays out.
[1] https://www.federalreserve.gov/newsevents/pressreleases/mone...