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Rate cuts increase the Fed’s “ammunition”

Summary:
I keep seeing this sort of comment: Federal Reserve Bank of Atlanta President Raphael Bostic said he opposed last week’s interest rate cut because two earlier reductions had provided insurance against global risks and the central bank needed to preserve its ammunition. It would be interesting to do a search of the Fed minutes and see how many Fed officials are mixed up on this issue. Tags:

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I keep seeing this sort of comment:

Federal Reserve Bank of Atlanta President Raphael Bostic said he opposed last week’s interest rate cut because two earlier reductions had provided insurance against global risks and the central bank needed to preserve its ammunition.

It would be interesting to do a search of the Fed minutes and see how many Fed officials are mixed up on this issue.


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Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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