By Yasser Abdih
There was a time when U.S. central bankers worried that inflation was too high, and they tried to bring it down. Now the opposite is true: the Federal Reserve is concerned that inflation has remained stubbornly low, and it’s trying to boost prices. The reason: persistently low inflation raises the risk that prices will actually start to decline, a dangerous condition known as deflation. That’s bad news because it makes people less willing to borrow and spend—anticipating lower prices, consumers will put off spending—and could also lead to a fall in wages. Continue reading
Filed under: Advanced Economies, inflation, International Monetary Fund, U.S. | Tagged: borrowing, Canada, China, core inflation, deflation, exports, Federal Reserve, IMF, inflation, Mexico, Philips Curve, spending, U.S., United States | Leave a comment »