While the article "How Much Should We Worry about a U.S. Deflation?" at the Brookings Institution is a month old, deflation is still a hot topic, so I thought I'd mention it. It explains what the Fed could do to fight inflation, even if interest rates get close to zero. I have a feeling this will not happen, but it's always nice to know that there are options available.
Important Links
- To learn more about how Fed reactions to inflation and deflation influence interest rates see "What is deflation".
- To learn about the link between exchange rates and interest rates see my "Guide to Exchange Rates".
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