Economic Affairs

Fed sets the stage for more asset price inflation

Higher tolerance for inflation means interest rates will stay lower for longer

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If you thought the Covid-19 pandemic would, at some point, be the catalyst to bring down overinflated asset prices, you might need to think again, because there is a good chance that they could get even more overinflated - thanks to the United States Federal Reserve.

For decades, central banks have had a totemic fixation on controlling inflation. That has been the main mandate and focus of monetary policy almost everywhere.

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A version of this article appeared in the print edition of The Straits Times on September 02, 2020, with the headline Fed sets the stage for more asset price inflation. Subscribe