This gradual approach would balance the risk of tightening monetary policy too quickly, which could lead to an abrupt slowing in the economy and inflation moving below the Committee's objective, against the risk of moving too slowly, which could engender inflation persistently above the objective and possibly contribute to a buildup of financial imbalances.
Secondly, there seems to be a fear that the current fall in the dollar could well engender inflation, and create a panicked response from policy makers where the Fed actually does raise rates and the Treasury begins to reduce government spending.
"I do not attach great weight to the idea that starting this process will create great risks of dropping back into very weak growth, falling into negative inflation and engendering a splurge in risk-avoiding behaviour," said Miles.
"I do not attach great weight to the idea that starting this process [of raising rates] will create great risks of dropping back into very weak growth, falling into negative inflation and engendering a splurge in risk-avoiding behaviour," he said.
Most of the people who lined up at the banks had no bank accounts, which in part reflects a deep distrust toward banks engendered by runaway inflation under Mr. Milosevic's rule.
Politicians accordingly tried to reassure the markets by giving greater power to central banks, some of which set explicit inflation targets.The post-Bretton Woods system worked well, engendering the long period of low inflation and steady growth known as the Great Moderation.
As he writes, " 'The economy' is also a social, political and psychological process," and the Great Inflation, he explains, did real damage to the American psyche, engendering a feeling of hopelessness, causing citizens to lose confidence in their political and economic institutions.
Indeed, there is an especially pernicious, albeit remote, scenario in which inflation turns negative against a backdrop of weak aggregate demand, engendering a corrosive deflationary spiral".
Defending the interest-rate policy, Greenspan used uncharacteristically brutal language to depict a nightmarish "pernicious, albeit remote, scenario in which inflation turns negative against a backdrop of weak aggregate demand, engendering a corrosive deflationary spiral".
Controls of prices and foreign exchange could not prevent persistent inflation and engendered shortages of staple goods.
