The gradual process used by the Federal Reserve in adjusting the funds rate in 25 and 50 basis point increments has become known as policy inertia.

Question

Quizplus · Accepted Answer

Policy inertia refers to the tendency of central banks, like the Federal Reserve, to adjust interest rates gradually in small increments, such as 25 or 50 basis points, to avoid market disruptions and allow for assessment of economic impacts.

The Gradual Process Used by the Federal Reserve in Adjusting