ECON 430 UMUC Interest Rates the Rate of Inflation & Economic Growth Discussion
ECON 430 UMUC Interest Rates the Rate of Inflation & Economic Growth Discussion
Interest rates are near an all-time low with the prime rate about 3.5% and the Federal Funds rate at 0.25%. This has helped to stabilize the economy since the onset of the Covid-19 pandemic in March 2020. Still, unemployment is at record levels and Congress has authorized trillions of dollars of economic stimulus.
In normal times such aggressive polices might be thought to risk overstimulating the economy. Are there reasons to think this may or may not be a risk at present?
Some are counseling the Fed to consider increasing interest rates later this year to forestall potential inflation. If you were an outside advisor to Fed Chair Jerome Powell what advice would you give to him and why?
