Short note on inflation and mon pol

There is a nice note on the topic by Richmond Fed.

Price stability is a significant objective of monetary policy. When inflation is high, variable or both, it interferes with the efficient operation of the economy and can reduce economic growth. In addition, once inflationary expectations have been set, bringing inflation back down can be painful.

It explains the basics of inflation index, why price stability is important and how monetary policy helps. A nice short explanation for students of monetary economics and can use it in their exams/papers etc…

One Response to “Short note on inflation and mon pol”

  1. soe Says:

    Once again I must remind readers that “price stability”, as used by central bankers, means “stability of price increase”, for example a 2% inflation. It should be obvious, then, that the term “price stability” is misleading. Whom it helps to use such confused terminology?

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