US Economy - who do you trust?

The Target 2.0 team from my school were in action yesterday in the Regional Final. They were placed second which means they miss out on the final but the department is still £650 better off - and I am sure the boys found the experience highly valuable. It certainly got them talking and thinking about monetary policy and the multitude of influences and indicators relating to inflation.

One of the questions they were asked as part of the competition was to compare the single target of the MPC (CPI 1% between 3%) against the dual target of the Fed (who are responsible for controlling inflation and growth).

It makes sense then, for Ben Bernanke to prefer a more aggressive interest rate policy if he is responsible for ensuring the US economy does not experience too slow growth. On the other hand…

Mr Bush rejected calls for a second package of measures, telling reporters at the White House press conference: “why don’t we let the stimulus package we have a chance to kick in”.

Which makes a nice case study in time lags.

Of course, the difference between the two is that Mr Bernanke may still be in office in 2009 - and picking up the pieces of the economic problems emerging now.