price stabilization


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Price Stabilization

The ultimate goal of the steps a central bank takes to reduce inflation. That is, when prices are rising rapidly, the central bank may reduce the amount of money in circulation and/or raise interest rates to bring down the rate at which prices are rising. Price stabilization does not bring prices down to their former levels, but it does reduce the rate at which they rise to a more sustainable level. While this is popular in theory, it is important to note that Federal Reserve chairman Paul Volcker caused a recession in the early 1980s when he raised interest rates to 18% to achieve price stabilization.
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price stabilization

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References in periodicals archive ?
He documents the desirability of, and the trade-off between, nominal price and asset price stabilization in response to this shock.
The Government is getting EC$40 million (US$14.8 million) in grant aid from the European Union under the provisions of the EU's Stabex (price stabilization) fund, reports CANA (May 14, 1998).
Producers will also try to obtain a suppression of the clause which mentions that the agreement is the sole price stabilization tool.
Forward looking behavior would imply a degree of automatic price stabilization. However, their empirical results only gives limited support for the first effect and in none of the six commodities analyzed did they find a significant interest rate effect.
In 1988 Mexico began its economic restructuring by focusing simultaneously on four interrelated issues: price stabilization, privatization, domestic deregulation and trade liberalization.
The analyst, however, does not expect "extreme price declines" and anticipates price stabilization in the second half of 2019.
pushed on Tuesday for the return of the Oil Price Stabilization Fund (OPSF) to alleviate the effects of rising oil prices on the Filipinos.
It also called on the National Development Council to coordinate with the agricultural council and other local agencies to follow closely the government's price stabilization measures.
With imports out of its concern, PIDS claims the NFA need not bother about price stabilization, and return to its mandate to buy more from farmers.
Rs.500 crore fund will be set up for price stabilization
As for the positive, that supports the market, we might name the oil price stabilization (yesterday EU confirmed introduction of oil embargo against Iran from July 1); Italy does not exclude buying bonds of NKB, rumor says the EU prepared a project of partial transfer of the budget sovereignty by the ones that violated the fiscal discipline to the European authority.