Why the Fed Worries Inflation Is too Low
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The Federal Reserve’s rate-setters announced on Wednesday that they are forging ahead with ultra-easy money, in part because inflation is running “somewhat below” the Fed’s target of 2 percent. The Federal Open Market Committee said it will leave the funds rate where it is, just above zero, and keep buying bonds at a pace of $85 billion a month.
This might strike some readers as odd. Why does the Fed want prices to go up? Isn’t inflation bad? And even if you buy the idea that a little inflation is good, who says inflation is running under 2 percent? It certainly doesn’t feel that way to families that are having trouble making ends meet.