COMMENT
Breadcrumb trail navigation:
By Frederic Mishkin
Published: October 24 2010 19:35 | Last updated: October 24 2010 19:35
Ben Bernanke, the Federal Reserve chairman, discussed his institution's inflation mandate in a recent speech, leading to speculation a numerical inflation target is under consideration inside America's central bank. And if there ever was a time to establish such a transparent and credible commitment to a specific target, it is now.
The Fed has a dual mandate, to achieve price stability and maximum sustainable employment. But at the moment it is missing both objectives. Inflation is well below 2 per cent. A sluggish economy means unemployment is likely only to decline slowly from its current level of about 10 per cent. This combination of economic slack and low inflation raises the possibility that inflation expectations will drift downwards.
You have viewed your allowance of free articles. If you wish to view more, click the button below.
Read Full Article »
