The Fed continued Decisively to hold rates up (135 basis points above the neutral rate), despite inflation falling back to just a Tenth of a Percentage Point from its Target. And on $36 trillion national debt, every percentage point, in excess of the interest rate necessary to keep prices stable and employment full, is unecessarily costing the country hundreds of billions of dollars in interest (this year!).
SEE MOREThe other part of the dual mandate, which the Fed says "stands on equal footing with price stability" and maximum employment. We'll get the most recent employment data later this week. The last reading of the unemployment rate was 4.2%. What's considered maximum employment? It turns out, a Fed Governor (Mr.Kugler) gave a speech of "Assessing Maximum Employment" last month. What was her assessment? For the current situation, she said maximum employment is "in the vicinity of 4.2%."
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