New Monetary Policy Approaching

With New Monetary Policy Approach, Fed Lays Phillips Curve to Rest | Investing News | US News

Before the covid pandemic, policymakers realized that the unemployment rate kept falling lower, and they expected a jump in inflation. They expected this because it followed the monetary policy that they have been following for years. The inflation never came and so central bank policymakers announced that they are going to come up with a new method for their monetary policy. Their method would attempt to lessen the fear that low unemployment could possibly lead to high inflation. The Fed announced that they will start aiming for two percent inflation over a certain oeriod of time rather than aiming for two percent inflation as an annual target. By using this method the Fed is not worried about unemployment being too low now that inflation levels are set in place, and they can now find more jobs available to people. I personally believe this is a better method considering now that inflation is set in place, people can expect and prepare for a steady rate of inflation. This method is also a great idea because more jobs will be available to everyone. The one downside I see is that it may be possible for some people to keep up with the steady increase in inflation.

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