Federal Reserve considers explicit pledge: Low rates if inflation stays down - The Wash... - 0 views
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Alfred NH on 23 Sep 13The federal reserve has issued a statement where they intend not to raise the interest rates as long as the rate of inflation keeps itself low. It had originally lowered the interest rates in response to the 2008 financial crisis. The issue with this is that persistently low rates leads to a fear of a low value. The effect of this is a decreased aggregate demand as there is a lesser incentive for consumption.