Thanks for your comment. I do not disagree. I don't necessarily think the Fed *should* lower their target. In a sense I'm laying out how I infer they make their decisions--"they" being the current members of the FOMC and Jerome Powell. By that I mean I look at their past decision(s) and make a guess on how they might act in the near future, given how the data looks now compared to how it looked when they made some previous decision. But, yes, I definitely see your point!
If PCEPI is at or near target level, and unemployment is at or near the target rate for full employment, what would be the rationale for disturbing the current equilibrium? I would argue that these values support making no change. The interest rate on Treasury debt is being driven by an irrational trade policy. Why encourage that irrationality by lowering interest rates generally?
Hello Rae,
Thanks for your comment. I do not disagree. I don't necessarily think the Fed *should* lower their target. In a sense I'm laying out how I infer they make their decisions--"they" being the current members of the FOMC and Jerome Powell. By that I mean I look at their past decision(s) and make a guess on how they might act in the near future, given how the data looks now compared to how it looked when they made some previous decision. But, yes, I definitely see your point!
If PCEPI is at or near target level, and unemployment is at or near the target rate for full employment, what would be the rationale for disturbing the current equilibrium? I would argue that these values support making no change. The interest rate on Treasury debt is being driven by an irrational trade policy. Why encourage that irrationality by lowering interest rates generally?