Thanks Infose,What you have written is correct and indeed the...

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17/12/21

11:56

Post #: 58363183
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Originally posted by Infose: ↑

"the Federal Reserve is keeping its 'emergency measures' in place and still will not commit to any interest rate increase in 2022."

The Fed has the dual mandate of price stability and maximum employment, two apparent contradictory objectives encapsulated in the so called Non-Accelerating Inflation Rate of Unemployment or NAIRU.

"The non-accelerating inflation rate of unemployment (NAIRU) is the lowest level of unemployment that can occur in the economy before inflation starts to inch higher. When unemployment is at the NAIRU level, inflation is steady; when unemployment rises, inflation decreases; when unemployment drops, inflation increases."

https://www.rba.gov.au/publications/bulletin/2017/jun/2.html

I know, I know that there has been a recent spick in inflation, but I also know that the FED seems to believe that such spick is transient in nature for the reason explained in the article pointed by the link shown below.

https://www.gspublishing.com/content/research/en/reports/2021/02/26/f5c6f652-09b7-4780-8cd8-f965f30462b5.html

I believe, therefore, that he time to act will come when the inflation is expected to start running above the Fed's target inflation rate, which I understand to be 2%.

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Thanks Infose,

What you have written is correct and indeed the consensus.

From the FED website - https://www.federalreserve.gov/newsevents/pressreleases/monetary20211215a.htm

"The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run."
----- Makes sense, so no problem there.

"In support of these goals, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent."
-----Makes sense, so no problem there.

"With inflation having exceeded 2 percent for some time, the Committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment."
----- Does not make sense, so a problem there. Should have started the sentence with, "Although inflation has..."

As strange as it may sound, after reading company announcements for a couple of decades, I found the ones with poor grammar, at precisely the point where you wanted them to be very clear, were always the ones trying to cover something up.

The FED's FOMC statements have been pretty good, up until now...

I will come back in a year to find out if my theory proves correct.
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