In 2012, the Federal Reserve announced an inflation objective of 2 percent “over the longer run” for the price index of personal consumption expenditures (FRED code: PCEPI). However, many analysts focus on the “core” price index (FRED code: PCEPILFE), which omits the volatile food and energy components. For the Fed’s horizon, does this difference matter? Plot the percent change from a year ago for both inflation measures since 2000. Download the data and compute the averages and standard deviations over that period. What do you conclude?
Answer to relevant QuestionsThe FOMC statement of December 12, 2012, indicated that the target range for the federal funds rate would continue at least until the rate of unemployment falls below 6½ percent or the projected rate of inflation one to two ...When you withdraw cash from your bank’s ATM, what happens to the size of the Fed’s balance sheet? Is there any reason for the Fed to react to your action?You pick up the morning newspaper and note a headline reporting a major scandal about the Federal Deposit Insurance Corporation that is likely to undermine the public’s confidence in the banking system. What impact, if ...Do you think the Federal Reserve successfully carried out its role as lender of last resort in the wake of the terrorist attacks on September 11, 2001? Why or why not? In a graph of the market for bank reserves, show how the Federal Reserve limits deviations of the market federal funds rate from its interest rate target under the channel system. Next, show how the Open Market Trading Desk ...
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