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Year-on-year inflation bottomed at 5% in December 1976 before moving higher once again. Paul Volcker was chosen as Fed Chairman in 1979 in order to deal with the challenge of high inflation. In a rare Saturday press conference on October 6, 1979, [6] Paul Volcker's federal reserve increased the Fed Funds rate from 11% to 12%. [7]
The Fed operationalizes its goal of a stable price level as a 2% annual inflation target. In August 2020, after undershooting its 2% inflation target for years, the Fed announced it would be allowing inflation to temporarily rise higher, in order to target an average of 2% over the longer term. [27] [28]
The Fed’s favorite inflation gauge—the core personal consumption expenditures (PCE) price index, which excludes more volatile food and energy prices—rose 2.8% from a year ago in March. That ...
The Fed's preferred inflation gauge — "core" PCE — showed prices rose 0.3% over the prior month in September, the most in four months, while annual price increases slowed modestly to 3.7% from ...
In August 2020, after undershooting its 2% inflation target for years, the Fed announced it would be allowing inflation to temporarily rise higher, in order to target an average of 2% over the longer term. [21] [22] It is still unclear if this change will make much practical difference in monetary policy anytime soon. [23]
A highly-anticipated inflation reading, the Federal Reserve’s last policy decision of the year, and a gauge of consumer spending will feature during a momentous week ahead for the U.S. stock market.
Early proposals of monetary systems targeting the price level or the inflation rate, rather than the exchange rate, followed the general crisis of the gold standard after World War I. Irving Fisher proposed a "compensated dollar" system in which the gold content in paper money would vary with the price of goods in terms of gold, so that the price level in terms of paper money would stay fixed.
The Fed keeps a close eye on several risks that could make its job of taming inflation even more difficult, such as red-hot consumer demand keeping some upward pressure on prices and the possible ...