But not all indicators of the labour market are healthy. Prospects for inflation: Unlike the employment target, the Fed has struggled to meet the second objective of its dual mandate—the 2% inflation target. Some view the recent inflation decline as both temporary and reversible, arguing that it is just a matter of time until the 2% target is reached. Others feel that the recent fall in inflation may be a sign of larger problems looming, thus requiring the Fed to temper its process of monetary policy normalization. Recovering from a policy mistake: The final area of major disagreement relates to the realm of “what if”—and, in particular, what if the Fed ends up making an inadvertent policy mistake.

Source: Mint June 27, 2017 20:03 UTC