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The Fed Shouldn't Act Rashly Over Inflation

Posted on July 29, 2008

I agree with this (from the FT, below) - the Fed should not be in a hurry to raise interest rates due to concerns about inflation. This inflation, unlike some in the past, is being driven by increases in the price of oil, food, and other commodities, it's not primarily the result of excessive increases in liquidity (money growth). Inflation that is driven by excessive money growth needs to be controlled, and the solution is for the central bank to reduce the growth in liquidity by increasing interest rates. But inflation that is driven by changes in relative prices is different. These price c...

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central bank , commodities , economy , fed , inflation , interest rates , oil , the fed