Should The Fed Adopt A 3% Inflation Target, Generate High Pressure Economy?

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Mark Melin
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Updated on

In a speech October 14, US Federal Reserve Chair Janet Yellen indicated a high pressure economy, one tolerant of elevated inflation, may be the only way back from the 2008 financial crisis. Why would the Fed open its mind to higher inflation in advance of a potential December rate hike? While that a “hot” economy benefits an often overlooked and currently angry demographic, a Goldman Sachs report raises the question: will the economic benefits be long lasting? A high pressure economy with higher inflation Central bank policy makers eyeing the point when an interest rate rise might be appropriate have had…

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Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.