High unemployment points to below-target (but still stable) inflation
The Federal Reserve has a mandate to promote price stability and full employment. Generally, “price stability” is given a forward-looking interpretation. Policy should be conducted so that expected medium-term (two- to five-year) inflation is low and stable or, less strictly, so that expected inflation beyond the next few years is low and stable. Households and businesses, too, are generally more interested in where prices are headed than in where they have been.
Volume (Year): 7 (2012)
Issue (Month): oct ()
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