U.S. Inflation Is Not Too Low
The Federal Reserve is preparing to normalize monetary policy and has plans to raise its policy rate from zero in the very near future. Economic conditions have improved markedly in the past year. This is seen in respectable economic growth and the unemployment rate has been falling below 5.5%, the Fed’s estimate of the natural rate. Until earlier this year the FOMC has been reluctant to normalize monetary policy and raise the federal funds rate because it felt that labor market conditions were still too soft. That reason is vanishing very quickly.
The Federal Reserve is preparing to normalize monetary policy and has plans to raise its policy rate from zero in the very near future. Economic conditions have improved markedly in the past year. This is seen in respectable economic growth and the unemployment rate has been falling below 5.5%, the Fed’s estimate of the natural rate. Until earlier this year the FOMC has been reluctant to normalize monetary policy and raise the federal funds rate because it felt that labor market conditions were still too soft. That reason is vanishing very quickly.
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