2016-02-19 16:00

‚Deflationary Bias‘ May Afflict U.S. Economy, Fed Paper Finds

Natalia Seliverstova / Sputnik
Natalia Seliverstova / Sputnik
The U.S. economy may be saddled with a „deflationary bias“ after the last recession that makes it harder for the Federal Reserve to achieve its 2 percent inflation goal, according to research published this month by the central bank.

Economists Timothy Hills, Taisuke Nakata and Sebastian Schmidt argue that the bias stems from a recognition by companies that the Fed has limited ability to spur the economy when interest rates are low.

That in turn prompts firms to reduce expectations of future costs, affecting what they decide to charge for their products and services.

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