The Fed Wants to Boost Inflation

The Fed Wants to Boost the Inflation

The Federal government has made very clear that it wants to boost inflation by keeping interest rates at ground zero levels and printing more and more money.

This is because according to Fed, some amount of inflation will help to reduce the unemployment rate in the USA which is sky high right now.

The US Government has now two choices – Inflation or Employment.

If it will keep the inflation under control, the unemployment rate will hike and if it want to reduce the unemployment rate than it will have to boost the inflation.

The yield on the 10-year Treasury note, a benchmark for mortgage rates and other long-term rates, slumped to a two-week low of 2.60% by 12:45 p.m. PDT from 2.70% on Monday. The two-year T-note yield fell to a record low of 0.43% from 0.46% on Monday.

The Fed tweaked its post-meeting statement to say that “measures of underlying inflation are currently at levels somewhat below those the committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability.”

The Fed thinks that the inflation rate is still lower than their expectations and this is the reason it want to boost the inflation more to reduce the unemployment rate.