Why Low Inflation? Blame the Fed’s Low Interest Rates

janet yellen fed us treasuries

This might sound counterintuitive at first. After all, monetary policy accommodation is supposed to cause inflation by encouraging consumers to borrow and spend. However, after piling up mountains of debt and dealing with poor wage growth (with middle-aged workers accepting jobs which pay less than the jobs they lost), consumers were not in the mood to borrow and spend. Continue Reading

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