The Federal Reserve is expected to release a plan in September that would help stoke moderate inflation, but only after the US economy hits targets regarding unemployment, economic growth and current inflation rates, according to CNBC.
The conditions are likely unachievable for at least a year, given the current economic downturn due to the impact of the coronavirus. With record high unemployment and record GDP shrinkage, the benchmarks are currently out of reach, particularly with inflation falling below the 2% rate.
Investors, however, have already bought into the future Fed policy. Gold prices have reached over $2,000 per ounce. Inflation-indexed bonds are being purchased more broadly. And the falling value of the dollar makes it a good investment overseas.
Economists generally agree that higher inflation–in the 3-5% range–is a signal of a healthy economy which can add value to savings and investments. Additionally, a higher interest rate gives central banks, like the Federal Reserve, the ability to manipulate interest rates in times of economic crises while near-zero rates, like we have now, handcuff responses.