The Federal Government has been strategizing and taking the first steps toward scrolling back the emergency supports in the economy at the height of the recession. Yesterday, the Fed Reserve announced they would be raising the emergency lending discount rate from back from 0.50 percent to 0.75. While the move symbolizes a certain confidence in the economy, it may not have been as necessary as many would think. The most recent slew of government data, published Friday, indicated radical measures on monetary policy remain unnecessary for the time being. Inflation is not a threat to the United States as of yet according to a consumer prices report released Friday, eliminating the need to begin potentially damaging reversals of supports for instance, raising the benchmark interest rate.
The consumer prices data denotes that inflation, in spite of the interest rate, which has hovered near zero for a period of nearly two years, is largely stable. Many Fed policy makers view inflation high among the determining factors for the timing of support removal, but the latest information provides more leeway for a gentle retraction.
The Labor Department released figures indicating the cost of living in the United States for the month of January remained more or less unchanged. Products and services across the board increased by a minor 0.2 percent.
The lack of flux diminishes the likelihood that inflation will recur in the coming months and year though the possibility remains that it could reemerge over in th enext couple of years. The Federal Reserve is working to minimize that stress by slowly cutting back supports.
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