In recent years, the Federal Reserve Board's monetary policy has been focused on maintaining historically low mortgage rates to support the housing market through the recession. However, the lengthy period of low long-term interest rates has some concerned that inflation looms just around the corner. To get a better understanding of whether consumers should be concerned that a prolonged period of record-low mortgage rates will lead to inflation, we interviewed Farrokh Hormozi, economics professor at Pace University, and Ray Hill, an economics and finance professor at Emory University.
Second: We need to distinguish between “investment money” and “spending money.” Fed policy injects money into the former by reducing the pressure on the Treasury and bonds market, which has more growth potential than inflationary effect.For the past 30 years, the fear of inflation caused by the easy-money policies of the Fed has proven to be wrong. The global goods market in conjunction with the global financial market is more dynamic today than it was 50 years ago. Today, the supply side of the market has become so dynamic that any revamping on the demand side quickly adjusts with no pressure on the price level. Today we are worried about deflation rather than inflation, even with the all the quantitative easing that is in place. In conclusion, there isn't a chance of looming inflation on the horizon, not even a remote one.