Shekel Rate, Interest Rate, Stagflation and 'Good' Inflation

Doug Henwood dhenwood at panix.com
Wed Jun 12 14:48:28 PDT 2002


pms wrote:


>When the market raises interest rates sharply don't central bankers raise
>the shorter interest rates just to keep up appearances? Then feed a bunch
>of catch phrases to the press to explain what's going on to us Rubes?

Soemtimes it's hard to say who's leading, the market or the central bank. But if bond rates rise sharply, any central banker is likely to conclude that inflation fears are rising, and they raise rates accordingly. It's not to keep up appearances - it's what their function in life is.

Doug



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