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Why did they make this choice

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Why would the Fed choose to keep the interest rate as is (close to zero) instead of raising it given these conditions: incomes have climbed, but household spending has decreased. labor market conditions have improved, but growth in economic activity has slowed. The interest rate is lower than the target rate of 2%, and consistently been too low for some time.

Why did they make this choice? Would another decision be more helpful? What macroeconomic principles can be used to understand what is happening here?

Reference no: EM132445738

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