![]() “It generally should be seen as a good thing that they have different opinions. Divergent opinions at the Fed is simply a feature of the central bank during pivotal junctures such as right now. So, Fed officials are divided, but it doesn’t really matter. Also, how much the resumption of student loan repayments this month will ultimately weigh on spending is unknown, given the Biden administration has recently approved some debt relief. It’s just not clear whether inflation will slow further as employers continue to hire at a solid clip or whether the bond market’s sell-off will constrain the economy just enough to pull inflation down. To put it simply, Fed officials are divided because the economy’s future is riddled with many uncertainties. San Francisco Fed President Mary Daly said last week that “if we continue to see a cooling labor market and inflation heading back to our target, we can hold interest rates steady and let the effects of policy continue to work.” Meanwhile, Fed Governor Michelle Bowman said recently that she continues “to expect that further rate increases will likely be needed to return inflation to 2% in a timely way.” It takes around a year for the Fed’s actions to be felt across the economy. Some officials think the Fed must raise interest rates more to tame inflation, while others think the rate tightening that’s been done will continue to further ease rising prices. The Federal Reserve has a complicated decision to make during its next policy meeting, which is only a few weeks away.Īll Fed officials agree that inflation needs to be defeated in a timely fashion, but they disagree on whether the central bank has already done enough.
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