U.S. Economic News

August 22, 2016

U.S. Economic News

The Wall Street Journal’s Greg Ip writes that the Federal Reserve should seriously consider raising its inflation target to give the central bank more room to cut interest rates during recessions.  Ip argues that the risk of impotent monetary policy in a time of low inflation is more serious than the effects of higher inflation on price levels or market expectations.  WSJ

Stanley Fischer, vice-chairman of the Federal Reserve’s Board of Governors, said that the central bank is close to meeting its policy targets of 2% inflation and maximum employment.  However, noting that the U.S. has weathered a number of financial and economic storms since the last recession, Fischer cautioned that output could be adversely affected if the recent trend of slower productivity growth persists.  FT

Reuters reports that US banks are slowly making the transition to digital banking while consumers are still reliant on brick-and-mortar branches.  While physical branches help add new customers and clear checks, they are expensive to operate and take time to achieve full profitability.  Reuters

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