The Fed is slowing down the stimulus campaign because the strength of the economic recovery that we are experiencing. Interest rates are trying to be kept near 0 at least until the unemployment rate is not as high. The Fed believes that the economy is growing very well right now, and the couple of months that we experienced a decline will happen every once in a while no matter how strong the economy is. They do not want to commit to a future policy in order to allow the economy to grow like it is now. There is a lower supply for employment than there is a demand. This will create high inflation if the Fed does not wind down their stimulus campaign.
http://www.nytimes.com/2014/04/10/business/economy/hesitant-fed-decided-time-was-right-to-change-stimulus-campaign-minutes-show.html?ref=economy&_r=0
1 comment:
I believe the economy is doing pretty well as well despite the misleading unemployment rate numbers. Unemployment could be pretty high right now due to people graduating and more people seeking jobs than what is currently available. There is always fluctuating numbers in the economy and it is nothing to look too deep into.
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