Negative Federal Funds Rate?

Doug Henwood dhenwood at panix.com
Fri Nov 8 16:46:07 PST 2002


Michael Perelman wrote:


>The key is not supposed to be the difference between the interest rate and
>the inflation rate, but between interest and expected inflation. If
>borrowers expect deflation in the near future, interest rates can still be
>significant.

But, as they say, expected inflation is nonobservable. Unless you've spotted it.

Doug



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