Fear Of Inflation, But Not Recession
Financial markets were sent into a late-day spin after being caught off-guard by the Federal Reserve decision to raise the rate it charges banks for emergency loans. [. . .] The increase in the discount rate is just one of several moves the Fed is taking to reverse its unprecedented easing of monetary policy, but it is perhaps the most visible action taken so far. [. . .] [T]he move was widely seen as a key step in the central bank's move toward raising interest rates more broadly.
Why in heaven's name would the Fed take such an approach? Surely not a rational fear of inflation. Today, new inflation numbers were released - they show DEflation for the first time since 1982:
|< Thursday Night Open Thread | Excise Tax In Exchange For The Public Option? >|