Wednesday, January 25, 2012
Fed adds more punch to low-rate pledge
I believe as the economy grows bigger and bigger, it is more difficult for any single entity to control the whole economy. However, when the economy gets into trouble, it all falls back to the government to step in, first to help, and second as a insurer. In other words, the government proves to be more important than ever with the role of stabilizing the market. Maybe, the government can play a bigger role in the economy in the future.
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It is very interesting that the FED has decided to use an approach that makes it more transparent. There are definitely both benefits and detriments to being committed to keeping the interest rates low until 2014, as the article pointed out. Hopefully, the low interest rates help increase growth further and more rapidly. In addition, the knowledge that low interest rates will be here for a while should increase consumer confidence and spending, which would help the economy.
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