What Trump’s Attacks on the Fed Teach Us About Inflation
Independent central banks were created to control spiraling prices by tamping inflation expectations. Now central bank independence is under threat, but inflation expectations haven’t moved. To Bloomberg Economics, that flags three important points: First, the main challenge facing central banks is not too much inflation -- it’s too little. Second, the market may believe that even politically influenced central banks won’t be able to lift prices. Third, at least in the U.S., politicians attacking central banks may be enjoying something close to a free lunch.
©2019 Bloomberg L.P.