Mark Thoma takes notice of Greg Ip's article in the Wall Street Journal this morning (page A2 in the print edition) reminding us, thank you very much, that negative supply shocks present monetary policymakers with the horns of a dilemma. On the one hand, real economic activity slows, at least in the short run. On the the other hand, price pressures build, although again in the short-run -- assuming that the central bank does what it should.
But what should it do? Ahh. There's the rub. The Journal accompanies the online version of Ip's article with the opportunity for readers to vote on what they believe the right course to be. The results as of 7:00 AM EST:
Cut the federal funds rate: 12%
Leave it at 3.5 percent: 45%
Raise the funds rate: 43%
Hmmm. I'll update over the course of the day.
UPDATE, 12:00 PM EST:
Cut the federal funds rate: 11%
Leave it at 3.5 percent: 49%
Raise the funds rate: 40%
UPDATE, 5:20 PM EST:
Cut the federal funds rate: 11%
Leave it at 3.5 percent: 49%
Raise the funds rate: 39%
Not sure where the extra 1% went, but it appears we have a winner.