The deflationary forward guidance threshold

In September I wrote that I expected the Fed to establish a lower bound for its inflation threshold as one of its next moves. The rationale was two-fold. First, inflation is undershooting and the Fed needs policy space to deal with unwanted disinflation. Second, a deflationary threshold would give wiggle room that the unemployment rate threshold does not. According to the Wall Street Journal this idea is in play at the Fed.

Here’s what the Wall Street Journal’s Jon Hilsenrath writes:

The F...


As this site is now reader-supported via Patreon, the remainder of this article is only available to subscribers at a specific patronage level. Articles at patronage levels BRONZE, SILVER, and GOLD are denoted by the categories in blue capital letters above the post. Posts categorized DAILY are available to both SILVER and GOLD patrons.

Click here to join. Your readership is greatly appreciated!

Registered users can log in by entering details here or below.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More