Fed Should Target Spending, Not Inflation
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June 25 (Bloomberg) -- The idea that what this economyneeds is more inflation will sound odd to most ears, but a lotof smart people are voicing it. They’re right that we needlooser money, but wrong about why.
The Federal Reserve has interpreted its mandate to promote“stable prices” to mean that it should shoot for an inflationrate of roughly 2 percent per year. The latest “core inflation”number -- which excludes energy and food prices because they’remore volatile -- was 1.68 percent. The Cleveland Fed estimatesthat the market expects inflation to average 1.55 percent overthe next decade.