Quote:
Originally posted by RoninLB
Even the WSJ connects a slower GNP with lower inflation in many of their articles. So in a contrast faster growth stimulates inflation. If you want a booming economy you risk inflation so the idea says. [Inflation meaning the value of the dollar without noise.] From this point of view opinions are made on investment, etc. Differences in opinion made markets.
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True, but what happens when inflation is being driven by worldwide forces and not those within our borders? In this case short term Fed rates lose punch.
Like you said, we have to acknowledge the possibility a slowing economy does not slow inflation enough. I won't argue that lower rates creates inflation, but rising rates may have a limited effect on inflation.