The Fed's Job Just Got a Lot Easier
Inflation remains subdued, which means employment is the only thing they ought to be worried about.
Speaking of inflation, Josh Mitchell reports that it's still low, continuing to trend even lower, and that this could "complicate" the Fed's decision-making next month:
Both overall prices and core prices (excluding food and energy) rose a tepid 0.1% in July....From a year earlier, overall prices rose 1.4% while core prices rose just 1.2%....That’s well below the Fed’s target of 2% inflation.
....The central bank, in a statement after its July meeting, acknowledged its concerns about inflation remaining low. The Federal Open Market Committee said inflation “persistently below its 2% objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.”
You know, there are some things that really are complicated. The Middle East is complicated. Education policy is complicated. Quantum mechanics is complicated. But low inflation? That should make the Fed's job less complicated. It means they don't have to worry about whether stimulative monetary policy will send us into an inflationary spiral, which in turn means that boosting economic growth and reducing unemployment are the only things they have to think about right now. That should make their job easier, not harder.