3 ms·
"Fed’s goal: get the U.S. inflation rate to 2%": This is partially true, since the Fed's goal is also to maximize employment[1]. So really, they should add empl
by nicolasehrhardt 11y ago
"Fed’s goal: get the U.S. inflation rate to 2%":
This is partially true, since the Fed's goal is also to maximize employment[1]. So really, they should add employment rates in these different categories as well. Which makes the job even harder.
In fact, balancing the two was thought to be a very hard job in theory, almost impossible. And that's why the EU central bank mission _is_ to only stabilize inflation and let each country focus on employment. (it's less and less true because of pressure from EU countries such as France and Italy).
[1] http://www.federalreserve.gov/aboutthefed/mission.htm http://www.federalreserve.gov/aboutthefed/mission.htm
- pachydermic 11y agoInteresting fact: adding the unemployment part of the dual mandate came after the recession of '73-'75 which saw unemployment hit 9%. Originally, the Fed's only mandate was to keep prices stable. [1] https://www.chicagofed.org/publications/speeches/our-dual-mandate https://www.chicagofed.org/publications/speeches/our-dual-ma... [2] https://en.wikipedia.org/wiki/1973%E2%80%9375_recession https://en.wikipedia.org/wiki/1973%E2%80%9375_recession
- jvm 11y agoThey have clearly adopted other goals as well, apparently popping bubbles or some such, otherwise with 10 year TIPS << 2% there would be no reason to raise rates.