Growth is always there in the MPC’s scheme of things; we don’t lose sight of that, but not at the cost of inflation.
Monetary policy should remain data dependent, be well communicated, and ensure that inflation expectations remain anchored.
Food and energy account for a significant portion of household budgets, so the Federal Reserve’s inflation objective is defined in terms of the overall change in consumer prices.
Unlike China’s growth story, which has been built on the strategy of creating excess supply, the Indian growth story has been built on the strategy of responding to incentives generated by excess demand. Which is why a certain degree of inflation is built into the Indian growth process.
In essence, the stock market represents three separate categories of business.They are, adjusted for inflation, those with shrinking intrinsic value, those with approximately stable intrinsic value, and those with steadily growing intrinsic value.
Inflation in Russia is primarily related to internal factors.
Inflation is taking up the poverty line, and poverty is not just economic but defined by way of health and education.
Slow growth and inflation have a tendency to accompany large deficits and increasing debt as a percentage of GDP.
Once an economy reaches a certain level of acceleration… the Fed is no longer with you… The Fed, instead of trying to get the economy moving, reverts to acting like the central bankers they are and starts worrying about inflation and things getting too hot.
By the time I became chairman and there was more of a feeling of urgency, there was a willingness to accept more forceful measures to try to deal with the inflation.
Avoiding inflation is not an absolute imperative but rather is one of a number of conflicting goals that we must pursue and that we may often have to compromise.
If you look around the world and see all the different countries struggling to get away from very low inflation rates with economies not nearly as strong as ours, you want to make sure we avoid those circumstances.
Each money-printing exercise brings about unintended consequences. These unintended consequences are higher inflation rates than had no money been printed.
The issue is, you’re not going to have a lot of inflation showing up when you have no velocity.
There is nobody who would want, in any way, to lose what Paul Volcker won for the American people by fighting inflation and achieving price stability.
It is human nature that when you see something work well, you do more of it. If, in its ceaseless quest for revenue, government sees a seemingly harmless method of raising funds without causing much inflation, it will grab on to it.
Ask me whether inflation represents longer-term problem. I think there’s a potential there for excess reserves to create problems.
If the world’s using bitcoin, governments won’t be able to fund wars through inflation like they do today.
Many emerging countries are facing the same issue of overheating and inflation because they have been vigorously expanding fiscal and monetary policy to counter the 2008 shock.
The reason inflation was brought down to manageable levels, by the time of Ronald Reagan’s re-election, was directly attributable to Jimmy Carter’s very courageous act, hiring a Federal Reserve chair, with the charge to induce a recession. That recession was probably the reason he didn’t win a second term.
The Fed’s buying is far more important to the market price of U.S. debt than any other economic variable. If the Fed stops buying, it doesn’t matter whether unemployment goes up or down. It doesn’t matter whether inflation is higher or lower. Its influence on the market is dominant.
For risk management reasons, we need to make sure we hit our inflation objective at the same time we’re at full employment.
The Great Inflation of the 1970s destroyed faith in paper assets, because if you held a bond, suddenly the bond was worth much less money than it was before.
Inflation is the one form of taxation that can be imposed without legislation.
Foreign trade clearly has been a reason why inflation has been low.
I would say to my colleague that the misery index, inflation and unemployment, when added together is the lowest it has been in the last series of Presidents, even going back to Jimmy Carter. So I think the Bush administration is doing a good job.
Stocks actually can be a very good hedge against inflation, and short of hyperinflation, stocks will have the ability to increase their dividends to match the rise in prices.
Historically, gold has always been a safe haven against inflation and a safe haven in times of political instability.
Less is always more. The best language is silence. We live in a time of a terrible inflation of words, and it is worse than the inflation of money.
The real problem is deflation. That is the opposite of inflation but equally serious to the borrower.
They flooded liquidity in the marketplace but the mortgage rate is based much more on expectations of inflation. So if the average investor believes that there is inflation coming, they’ll move that rate up.
If we were to underrun our inflation objective over a period of time that we tried to increase interest rates, I think that would be worrisome.
Monetary policy will, as always, respond to the economy’s twists and turns so as to promote, as best as we can in an uncertain economic environment, the employment and inflation goals.
What we define as a bubble is any kind of debt-fueled asset inflation where the cash flow generated by the asset itself – a rental property, office building, condo – does not cover the debt incurred to buy the asset. So you depend on a greater fool, if you will, to come in and buy at a higher price.
It’s a challenge for monetary policy to communicate that our inflation objective is 2 percent.
Low and stable inflation in many countries is an important accomplishment that will continue to bring significant benefits.
What we have to be careful is that if we drop interest rates where the rate of interest is lower than inflation, then savers will not put money in financial savings and move it to gold and real estate, which is bad for India.
I’m against using Petrobras to combat inflation.
The principle that a central bank, charged with controlling inflation, should be independent from the government is unassailable. It may also be true that it’s easier for the central bank to guard its independence from political pressure when it mainly holds government securities.
Starting in the wake of the 2008 GFC (Global Financial Crisis), market observers have warned of a crash in the bond market. Initially, it was believed that the trillions printed to bail out the banks would cause inflation and, therefore, a flight from bonds.
If you put tariffs in place, it creates inflation. If you put inflation in place, you have to raise interest rates. You raise interest rates, and stock markets shouldn’t be so high.
The reason I am so negative about the Federal Reserve’s policies is that they only target core inflation and argue that they can’t identify bubbles, but when each bubble bursts, they flood the system with liquidity that brings about unintended consequences.
Discussions of health care in the U.S. usually focus on insurance companies, but, whatever their problems, they’re not the main driver of health-care inflation: providers are.
We have to keep our eye on inflation, but so far inflation remains reasonably in check on the global stage.
The financial crisis and the Great Recession posed the most significant macroeconomic challenges for the United States in a half-century, leaving behind high unemployment and below-target inflation and calling for highly accommodative monetary policies.
To be sure, faster growth in nominal labor compensation does not necessarily portend higher inflation.
We have been mandated by the government, backed by legislation, that we have to have an inflation target of about 4%.
We aim to encourage investments that ease our supply-side bottlenecks, such as rural roads, cold-storage, and grain-warehouses, which will also help us combat inflation.
Median wages of production workers, who comprise 80 percent of the workforce, haven’t risen in 30 years, adjusted for inflation.
Inflation is taxation without legislation.
I will say this: the central banks can actually support growth beyond a point. When there is no inflation, they can cut interest rates, and that is the way they support growth, but if you cut interest rate to the bone, there is nothing more to cut. It is very hard to support growth beyond that.
People concerned about inflation today tend to buy big houses and nice cars.
If unemployment could be brought down to say 2 percent at the cost of an assured steady rate of inflation of 10 percent per year, or even 20 percent, this would be a good bargain.
There is no such thing as a riskless hedge against inflation.
I’m sure Mark Carney is a very clever young man, but I think that the government would be mad to move from inflation targeting to money GDP targeting.
