8.04.2005

Q&A: If the inflation risk is high, how will the central bank...

...attempt to contain that risk?

The central bank will try to tighten the availability of credit, by increasing the target fed funds rate (thus making credit dearer). This will force firms to borrow less, and expand less, leading to lower the pressure on wages. The central bank will try to tighten the availability of credit, by increasing the target fed funds rate (thus making credit dearer). This will force firms to borrow less, and expand less, leading to lower the pressure on wages.

Category: C++ Quant > Debt

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