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"If this were true, it would be trivial to stop and reverse inflation (i.e. deflate) with any increase in interest rates" Well, that is the strategy of the Fed
by Camus134 4y ago
"If this were true, it would be trivial to stop and reverse inflation (i.e. deflate) with any increase in interest rates"
Well, that is the strategy of the Fed. Raise interest rates when we experience too much inflation.
- floathub 4y agoThe Fed strategy is to reduce the rate of growth (1st derivative) or prices, not reduce the actual price level (which would be deflationary). And that's non-trivial for many reasons, including the fact that not every price signal responds the same to short term interest rate movements.