Inflationary Signs Are Everywhere In The Commodities Market – Investing.com

  • Date: 30-Apr-2021
  • Source: Investing.com
  • Sector:Oil & Gas
  • Country:Gulf
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Inflationary Signs Are Everywhere In The Commodities Market – Investing.com

This article was written exclusively for Investing.com

In August 2020, the US Federal Reserve made a not-so-subtle change to its policy. The Fed changed its 2% inflation target rate to an “average” of 2%. The central bank is willing to tolerate inflation well above its previous target before increasing the short-term Fed Funds rate over the coming years.

The tidal wave of central bank liquidity and government stimulus to stabilize the economy in the wake of the global pandemic is highly inflationary. It increases the money supply and US national debt. The Fed is taking a leap of faith when it comes to inflation, assuming it will be able to stop the rising tide of an economic condition that erodes money's purchasing power.