Mitchell’s Musings 6-19-17: What If What We Know Ain’t So?

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Mitchell’s Musings 6-19-17: What If What We Know Ain’t So? Daniel J.B. Mitchell The Fed keeps raising interest rates to counter inflation as the unemployment rate falls to a level (below 4½%) that someone thinks will cause price inflation to rise above the Fed’s target of 2%/annum. Let’s set aside the question of why 2% is the target. (Why not 2.5% or 1.5%? What price index is best?) The fact is that core inflation (excluding volatile food and energy prices), shows no trend toward acceleration: Core Consumer Price Index: May of Year Shown: 12-Month Percent Change: 2.3 2008 1.8 2009 0.9 2010 1.5 2011 2.3 2012 1.7 2013 2.0 2014 1.7 2015 2.2 2016 1.7 2017 Nor is there any sign of inflation expectations accelerating above 2%:

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