FED targeting the interest rate versus inflation
What is the main difference between FED targeting the interest rate versus inflation and which one is Bernanke using nowadays? Name some countries which use this method nowadays.
Expert
Interest rate targeting refers to adjustment of money supply through open market operations so that the interest rate (mostly the fed funds rate) remains constant, whereas inflation targeting refers to periodic adjustments to the Fed funds rate target to keep inflation under control or within a preferred range. Bernanke is using inflation targeting today. A few countries that use this method today include Australia, Brazil, UK, Canada, South Korea, Egypt, etc.
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Question: Why might it be difficult for the Fed to formally adopt inflation targeting? Would inflation targeting be a good policy for the Fed in the present economic environment? Discover Q & A Leading Solution Library Avail More Than 1424253 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1943242 Asked 3,689 Active Tutors 1424253 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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