patrick.net

Economy’s Growth

Fed chairwoman says labor-market strength should lead to higher inflation next year.

WASHINGTON—Federal Reserve Chairwoman Janet Yellen said “the ongoing strength of the economy will warrant gradual increases” in short-term interest rates, to keep unemployment low and to nudge inflation toward the Fed’s 2% target.

Gradual increases in the benchmark federal-funds rate “are likely to be appropriate over the next few years to sustain the economic expansion,” Ms. Yellen said, according to remarks prepared for delivery Sunday at a Group of 30 banking seminar in Washington.

Fed officials are nonetheless watching price pressures closely, Ms. Yellen said, as the “biggest surprise in the U.S. economy this year has been inflation.”

The Fed’s preferred price gauge, the personal-consumption expenditures price index, rose 1.4% on the year in August and so-called core prices were up just 1.3%—well below the Fed’s long-elusive 2% annual target.

https://www.wsj.com/articles/yellen-says-gradual-rate-increases-should-help-sustain-economys-growth-1508072402
Volcker's Announcement of Anti-Inflation Measures
October 1979

In October 1979, Fed Chairman Paul Volcker announced new measures by the Federal Open Market Committee aimed at reining in the inflation that had afflicted the US economy for several years.

As a result of the new focus and the restrictive targets set for the money supply, the federal funds rate reached a record high of 20 percent in late 1980.

https://www.federalreservehistory.org/essays/anti_inflation_measures

#HellinYellen