Quote of the Day: Federal Reserve Finally Starts to Get Serious

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


From the Federal Reserve, announcing a bigger, bolder bid to use the expectations channel to manage monetary policy:

In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.

This is a considerable surprise. Instead of merely confirming that they’re still committed to their previously announced quantitative easing program (QE3) and that low interest rates are “likely to be warranted” through 2015, the Fed has gone much further. They’ve now announced specific goals: interest rates will stay low at least until unemployment gets below 6.5 percent, and they’re willing to tolerate inflation of 2.5 percent along the way.

This may seem like small potatoes. Unemployment will probably drop below 6.5 percent by 2015 anyway, and inflation of 2.5 percent is only slightly above the current target.  But in this case, it really is the thought that counts. A specific employment target is brand new, and a willingness to tolerate higher inflation at all is brand new.

This is big news. I expect conservative outrage (“debasing the currency,” “hyperinflation right around the corner,” etc.) to be in full swing by the time I manage to hit the Publish button on this post.

POSTSCRIPT: And why the change? Because the Fed believes the economy continues to show a lot of weakness. “The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.”

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

payment methods

We Recommend

Latest