The Federal Reserve is trying to reduce inflation… | Value LinePosted on
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The Federal Reserve is moving full steam ahead on the monetary policy tightening front. The central bank strategy is to cool the economy, hoping that “tighter” money will reduce demand for goods and services, and thus reduce inflation. Specifically, the Fed is quickly raising the benchmark short-term interest rate while also selling bonds for cash. The idea is that by removing cash from the financial system, consumer and business spending will be reduced. The bank feels that with less total spending, recent price rises will be moderated. Learn more about this topic here.
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