US inflation will help to make the fed “the right decision”

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In USA today published data on consumer price inflation for October. In October, the annual inflation rose 2.5%, matching the market forecast. Compared to September inflation in October accelerated and increased by 0.3%, which also corresponds to the forecast consensus. But core consumer prices, which do not include prices for energy and food, in October rose at an annual rate of only 2.1%, which was below market expectations, which was expecting growth of 2.2%.
The acceleration of inflation, which is already significantly exceeds the target level, the fed in 2018, equal to 2%, will be a strong argument of the supporters of tight monetary policy. With high probability at the December meeting of the Federal open market Committee, the fed interest rate is raised. However, not all American economists believe that inflation is a major threat to the US economy, which the fed must fight.
For example, Alan Greenspan, the former head of the Federal reserve, one of the most influential leaders of the fed and is very respected in the US and in the world of economists, believes that the main threats to the American economy is bloated the national debt and full employment, which only spurs inflation. And all these causes together, according to Greenspan, could lead to slower economic growth in the United States.
However, the current leadership of the fed prefers to do his usual thing – the interest rate most likely, the decision to raise rates in December will be accepted. The dollar after the publication of inflation data in the US is very slow growing in relation to the Euro is only 0.02%, while against the British pound strengthened slightly more – 0.24%.
Natalia Milchakova,
The Deputy Director of analytical Department,