WASHINGTON—As the economic recovery evolves from forecast to reality, the Federal Reserve will face a question that has vexed it in the past: how to signal its eventual tightening of the money spigot., and subsequently raising interest rates, will take years unless inflation unexpectedly surges. Its first step down that road will be to start talking about it in the coming months or weeks—Chairman Jerome Powell’s next big test with financial markets.
. The Fed said in a postmeeting statement that the U.S. labor market and inflation would have to make “substantial further progress” before it begins to reduce its bond program. Asked at a press conference whether it was time to start talking about talking about reducing bond purchases, Chairman Jerome Powell said, “Not yet.”
On April 14, Mr. Powell took a small and subtle but important step by establishing parameters for the coming discussion, more clearly defining his goal. The Fed will be measuring the economy’s progress “, when we [first] announced that guidance,” rather than from March, when policy makers reiterated it, he said. That means with each indicator of improvement, there is less ground to make up.
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That will never happen. Jerome would rather risk burning the US down with runaway inflation then see a minor correction in equity markets.
we need to raise interest rates from -0 to 0
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