With the U.S. economy still performing poorly, U.S. monetary policy remains quite easy. Because expected inflation is greater than short-term interest rates, real short-term interest rates are negative. In addition, the Federal Open Market Committee (FOMC) announced on Wednesday, June 20 that it will take steps to further reduce long-term interest rates by selling some of the shorter-term government bonds it holds and using the proceeds to buy longer-term government bonds. Is conduct of monetary policy creating an environment in which we should worry about inflation?
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Based on various posts, it is indeed creating inflationary situations. If you have read Ed Butowsky post("Obama Chose Monetary Policy - And You're Feeling It") in Fox Business News, you'll realize the impact of monetary policy.
http://www.foxbusiness.com/investing/2012/09/10/obama-chose-monetary-policy-and-youre-feeling-it/
Posted by: Jesica | 09/12/2012 at 11:54 PM