The Federal Reserve claims that its decisions to raise or lower interest rates are well reasoned and in line with the inflationary environment. Yet the Fed’s inflation crystal ball is highly clouded, creating a backdrop for monetary policy that may do more harm than good. Bloomberg writer Peter Coy finds that, while inflation is notoriously difficult to measure or forecast, some economists are examining promising new ways to do just that. getAbstract recommends this intriguing article to financial forecasters, economists and others interested in the pitfalls of price predictions.
In this summary, you will learn
- How the Federal Reserve makes interest rate decisions based on traditional measures of inflation;
- Why the difficulty of gauging and predicting inflation may taint those decisions; and
- Why the Fed might consider new, more accurate ways of assessing inflation.
About the Author
Peter Coy is the economics editor of Bloomberg Businessweek.
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