History

How did the Federal Reserve change the way it reacted to inflation?

Link to this answer

CloseClose

Link to this answer

Share this credible answer with others. Simply paste this code into your blog or Web page:

<a href="http://qanda.encyclopedia.com/question/did-federal-reserve-change-way-reacted-inflation-610535.html" >How did the Federal Reserve change the way it reacted to inflation?</a>
E-mail this answer Link to this answer

Because of these new economic theories in the 1980s, the Federal Reserve began to change the way it reacted to inflation. When inflation rose one percent, the Federal Reserve would raise interest rates 1.5 percent rather than the less aggressive 0.75 percent it would have applied in earlier years. This bolder approach to controlling the money supply was much more effective in controlling inflation. As a result, even though the economy boomed from 1982 through the 1990s inflation remained mild.

Answer verified with
Get more facts and information about Money Supply from Gale Encyclopedia of U.S. Economic History at Encyclopedia.com.

Similar questions: Why did the Federal Reserve change the way it reacted to inflation in the 1980s? Why did inflation remain mild from 1982 through the 1990s? [ Hide these questions ]

Related research questions

Related research articles

'97 GOOD FOR U.S. WORKERS; WAGES, BENEFITS UP, BUT INFLATION LOOMS.(BUSINESS)
Newspaper article from: Daily News (Los Angeles, CA) ...measure of changes in wages...companies to find ways to offset...crisis. The inflation-sensitive bond market reacted negatively...Last fall, Federal Reserve Chairman...He called inflation coming from...Tuesday they did not expect...Hill Inc. Inflation as ...
IF MARKET TAKES A PRATFALL, DON'T BLAME LAGGING CORPORATE PROFITS.(Business)
Newspaper article from: Seattle Post-Intelligencer (Seattle, WA) ...rates and inflation. ``Data...but has reacted violently to adverse changes in inflation and interest...when the Federal Reserve - faced with...The cuts did the trick...rate setting Federal Open Market...Committee would change its monetary...challenging the ...
Changing monetary policy rules, learning, and real exchange rate dynamics.
Magazine article from: Journal of Money, Credit & Banking ...expected inflation and the output...the rules change over time...draws upon changes in the way that central...such as the change that occurred...Volker to the Federal Reserve chairmanship...typically reacted by raising...chairman of the Federal Reserve ...
Fed hikes funds rate, showing its resolve to contain inflation in growing...
Magazine article from: The Bond Buyer ...The Federal Reserve launched...strike against inflation on Friday...nudged the federal funds rate...members of the Federal Open Market...backhanded way, accepted...said she did not expect...Money markets reacted immediately...pushing the federal funds rate...by ...
Manufacturing Index Unexpectedly Strong; Report Boosts Fear of Inflation, Rate...
Newspaper article from: The Washington Post ...likely that the Federal Reserve, which wants...growth to keep inflation in check, will...NAPM numbers did not show quite...the bond market reacted so negatively...reading of changes in the prices...manufacturers have found ways to cut other...
See all results at HighBeam

HighBeam gives you access to newspaper, magazine, and trade journal articles plus press releases, facts, information, and biographies from thousands of sources.