Former research director of the US Federal Reserve System (Fed) David Wilcox (David Wilcox) and a special adviser to the former chairman of the Fed David Rafshnider (David Reifschneider) were offered to raise Target on inflation (a state reference point for price increase – “Lenta.ru”) From two to three percent, after which go to the sharp decrease in the key bet. Economists are confident that such measures contribute to a more efficient restoration of the American economy, reports Reuters.
Wilcox and Ripfshnider calculated that increasing the target inflation and “shock therapy” – a sharp decline in rates – will allow to further work out about 1.2 million people every year. Under the “shock therapy” economists imply a sharp and significant reduction in rates against the background of relatively high inflation indicators. In this case, serious risks from such measures former employees of the Fed do not see. On the contrary, they are confident that the formation of cash bubbles and related risks managed and are justified by the increased growth of the economy and boom in the labor market.
At the moment, the US Fed Policy is aimed at stabilization of prices, therefore there was no speech on raising target. However, inflation in the United States recently broke the 12-year record, and now the department allows the possibility of temporary raising the target. At the same time, many leading economists are confident that the Fed needs to take the next step and raise Target for a long time.
The two-percent trgete for inflation was installed even at a time when global interest rates were lowered below, as a result of which the target was recorded at a record low. However, now such a policy is outdated, and economists call on the Fed to recognize the futility of the current target and raise it at least up to three percent on a relatively long term.
Riphshnider and Wilcox lead research according to which the central banks raised by Target will be able to better manage inflation, supporting it at the right level, and ensure the employment of the population. The Fed promised to revise the target inflation rate in five years. Former employees of the department in response to this argue that by that time inflation subsides, and unemployment will not return to an acceptable level.
At the end of July, the head of the Fed Jerome Powell and himself recognized that inflation in the United States is not subject to the regulator. In his opinion, the sharp discovery of the economy caught the company by surprise, and they simply could not satisfy a sharp increase in demand, which led to a record price increase. Powell predicts that prices rise to Target only in 2022.