Table of ContentsIntroductionWhat are the factors contributing to the rising inflation?How has inflation affected the market?Financial measures in the framework of the US government's inflationary riseImplementation of additional monetary easing (hence- called QE 3)The newly decided MBS purchasing policies at the FOMC in SeptemberConclusionRecommendationIntroductionMeasuring inflation is a difficult problem for government statisticians. To do this, many representative elements of the economy are grouped together in what is called the “market basket”. The cost of this basket will be compared over time. Consequently, the price index which corresponds to the cost of today's consumer basket will be the ratio to the cost of the same basket for the current financial year. In North America, there are two main price indexes measuring inflation. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay Consumer Price Index (CPI) – a measure of the change in prices of consumer goods and services such as gasoline, food, clothing, and automobiles. The CPI measures price fluctuations from the buyer's perspective. U.S. CPI data can be found at the Bureau of Labor Statistics. Producer Price Index (PPI) - A type of indicator that measures the average change when domestic producers of goods and services sell their prices. The PPI measures price fluctuations from the seller's perspective. U.S. PPI data can be found at the Bureau of Labor Statistics. What are the factors contributing to rising inflation? The sectors related to automobiles, clothing and housing are the most important in the calculation of underlying inflation. As for automobiles, as mentioned above, gasoline has fallen and the impact of the earthquake in Japan has almost reached the end of automobile prices, so inventories have returned to a normal level and it does not There was no impact. When it comes to clothing, cotton as a raw material has fallen in recent months and there is no reason for the price of fiber to increase. The rest is made up of housing. As you know, the housing recession in the United States is affecting many households and is the result of eviction from home. This is therefore due to the shortage of rental housing where these people live. According to the survey, the demand for rental housing is expected to vary from 360,000 to 470,000 in 2010 from 2010 to 2020, and therefore see the graph showing the gap in the development of rent and property prices As long as the rise in rental property rents shows strong growth compared to around 2005, this is a positive gap even in 2011. On the other hand, rental housing is only delivered to the tune of 125,000 cases in 2010, and the number of rental housing starts fell dramatically in fiscal 2011, so the pace of supply is expected to remain slow going forward. As a result, we can see that the irony of the result is that rising rental housing rents lead to inflation. How has inflation affected the market? Many analysts say valuations assessed in light of company earnings are rich. in past norms and the employment data shows that the economic fundamentals supporting the stock are strong, so the stock market is separate, I believe. Inflation has not yet risen from the level, as long as the pace is muted the stock has room to rise. Movements linked to economic growthhealth, U.S. deficit spending and the World Central Bank's rise in interest rates from record lows have pushed U.S. bond yields higher for the first time in four years. Rising yields could counter the lure of investors paying high dividends and increase borrowing costs for U.S. businesses and households, potentially putting pressure on economic growth. The first response to the CPI data on Wednesday was that the benchmark S&P 500 e-mini ESc 1 yield fell to the lowest level of 2,627, while the US 10-year bond yield US 10 YT =RR increased to 2.891%. Before weakening, the dollar outperformed. DXY against the basket of major currencies. However, the stock rallied, turned positive after the opening bell and the 10-year bond yield eased. Currency strengthening usually comes in response to economic improvement, but even after the recent rise, the U.S. dollar is near its lowest level for the first time in four years. Some of these weaknesses are based on the reduction of economic measures taken by central banks other than the FRB. As there is current concern, if the US economy does not show a significant increase in inflation, it could tighten the Fed's hands by raising interest rates and depressing the dollar. Financial measures amid rising inflation from the US government Implementation of additional monetary easing (called QE 3 ) As mentioned previously, the Fed has stated that "it is possible that economic growth will not be strong enough to allow a lasting improvement in the labor market without a one-step policy easing". first decided to buy mortgage-backed securities (MBS) for an additional $40 billion per month. Furthermore, in the statement, "If the labor market outlook does not improve materially, the committee will continue the purchase of MBS, implement additional asset purchases and necessitate the use of other measures policies accordingly. "Regarding the purchase of MBS this time, so-called "open-type" asset purchase measures were adopted, without specifying a time frame or scale. Furthermore, as a period for which an unusually low FF interest rate is reasonable, "for now it is expected to be at least within the middle of 15 years", and the time axis extends from "late to at least 14 years". “Until August.” It was done. Furthermore, in order to support continued development aimed at maximizing employment and stabilizing prices, the committee said: "In a considerable period after the strengthening of economic recovery, we expect that a very soft monetary policy will continue to be implemented. 'be appropriate. The policy interest rate may be kept at an unusually low level for a long period of time. Although the policy adopted in the September decision is similar to the previous measure, it does not clearly indicate when the key interest rate will be applied. an "open" type asset purchase policy, the economic recovery is said to have launched a new effort as FRB as the time axis was extended for a considerable period after the strengthening. The MBS purchase policies newly decided at the FOMC in SeptemberThe MBS purchase decided on September 12, 2000 was carried out as part of the credit mitigation measures from January 2009 to October 1998, except that the deadline and the final scale are not clearly specified. Basically the same thing, we will purchase a fixed amount of agency MBS each month. Here I..