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  • Minneapolis Fed President Kashkari: Inflation appears to have stopped falling and economic activity has proven resilient
Ekonomické zprávy
07.05.2024

Minneapolis Fed President Kashkari: Inflation appears to have stopped falling and economic activity has proven resilient

  • Inflation moving sideways raises questions about how restrictive policy is.

  • While the most recent headline GDP appears somewhat weaker than prior quarters, that slowdown was driven largely by inventories and net exports. 

  • Underlying domestic demand remained strong.

  • The labor market has also remained strong with the unemployment rate at a historically low 3.9 percent.

  • The housing market is proving more resilient to that tight policy than it generally has in the past. 

  • Given that housing is a key channel through which monetary policy affects the economy, its resilience raises questions about whether policymakers and the market are misperceiving neutral, at least in the near term. 

  • It is possible that once the reopening dynamics of the post-COVID economy have concluded, the macro forces that drove the low-rate environment that existed before the pandemic will reemerge, pulling neutral back down. 

  • The FOMC must set policy based on where neutral is in the short run to achieve our dual mandate goals in a reasonable period of time. 

  • The uncertainty about where neutral is today creates a challenge for policymakers.

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