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MNI: Fed: Monetary Policy Rules Call for Rates in 4%-7% Range

(MNI) Washington

Simple monetary policy rules call for much higher rates, but they may be less applicable in today's unusual circumstances, the Fed says.

Simple monetary policy rules called for a fed funds rate in the 4% to 7% range in the first quarter of 2022 and have risen since then as inflation climbed, the Federal Reserve said in its report to Congress on Friday ahead of Chair Jerome Powell's semiannual testimony next week.

The Fed also cautioned that the usefulness of these rules are "limited in unusual economic circumstances" and don't take into account the effect of balance sheet tightening.

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Simple monetary policy rules called for a fed funds rate in the 4% to 7% range in the first quarter of 2022 and have risen since then as inflation climbed, the Federal Reserve said in its report to Congress on Friday ahead of Chair Jerome Powell's semiannual testimony next week.

The Fed also cautioned that the usefulness of these rules are "limited in unusual economic circumstances" and don't take into account the effect of balance sheet tightening.

Keep reading...Show less