These fell to 0.6% by the end of 2016; 1.1% by the end of 2017; and 1.9% by end-2018 at the recent FOMC meeting. But the forecast of core PCE (personal consumption expenditures) inflation for end 2016 is actually higher now than it was in December 2015. That suggests even if growth is as low as predicted, the policy rate should be well above where it is now. True, markets are currently basking in the warm glow of Yellen, Kuroda and European Central Bank governor Mario Draghi’s unconditional support. But the risk is the irreparable damage such a policy does to the central banks’ credibility.

Source: Mint September 25, 2016 17:15 UTC