As the Central Bank of the United States, the Federal Reserve is charged, by Congress, with conducting monetary policy to support maximum sustainable employment, stable prices, and moderate long-term interest rates. Since stable prices and moderate long-term interest rates go together, its three objectives are often called the Fed’s dual mandate.
The Fed attempts to ensure maximum employment while sustaining a stable inflation rate. Prices are stable if consumers and businesses can plan, borrow and lend without worrying about rising or falling prices. If prices are stable, long-term interest rates will be moderate.
The impacts of recent tax reforms on the economy, have caused some market observers to wonder if a stronger economy will cause inflation to increase enough to cause the Fed to more actively dampen the economy. The Bureau of Labor Statistics (BLS) released February price index reports which help alleviate those concerns.
February’s Consumer Price Index only increased a modest 0.2 percent from January levels—in line with pre-report forecasts and 0.3 % lower than the January increase. Over the last 12 months, consumer prices increased 2.2 percent. Transportation, communication and medical care costs fell. Apparel and housings costs increased.
The Producer Price Index also increased a modest 0.2 percent during February as expected—down from January’s increase of 0.4 %. During the past year, producer prices have increased 2.8 percent compared to 2.7 percent in January. Wholesale vegetable prices fell 27 percent. Construction prices increased by 0.1 percent.
Most Fed watchers are expecting the Fed to slowly increase interest rates three to four times during 2018. There is nothing in BLS’s February’s price index reports to support a more frequent schedule.
The human condition desires stability. People will try many things, in an often-vain attempt, to reduce risks and obtain a sometimes-fleeting stability. But members of the kingdom have a better way. The Lord gave clear instructions on how believers can find stability.
In parable, the Lord indicated that one who comes to Him, and hears and obeys His words, is like a man who built his house on a foundation of rock. Though storms many come, the house will not be shaken. It will survive because it is well built. In contrast, the one who hears but does not obey, is like a person who built his house on the ground. When the storms came, the man’s house will fall. Note that both men experienced the storm. However, obedience to the Lord provided stability and victory to the disciple.
Why do you call Me, ‘Lord, Lord,’ and not do what I say? Whoever comes to Me and hears My words and does them, I will show whom he is like: He is like a man who built a house, and dug deep, and laid the foundation on rock. When the flood arose, the stream beat vehemently against that house, but could not shake it, for it was founded on rock. But he who hears and does not obey is like a man who built a house on the ground without a foundation, against which the stream beat vehemently. Immediately it fell, and the ruin of that house was great (Luke 6:46-49).
Another time, the Lord was with His disciples in a boat during a storm. The boat must have been rocking severely. Waves were covering the boat. The Lord was asleep. In fear, the disciples woke the Lord. Jesus rebuked them for their lack of faith, and then calmed the storm. As believers we have been given the name that is above all names and have the authority to use it. Stability and victory in the face of storms, may depend on our faith in the Word and in His name.
Then He entered the boat, and His disciples followed Him. Suddenly a great storm arose on the sea, so that the boat was covered with the waves. But He was asleep. His disciples went to Him and awoke Him, saying, “Lord, save us! We are perishing!”
He replied, “Why are you fearful, O you of little faith?” Then He rose and rebuked the winds and the sea. And there was a great calm.
The men were amazed, saying, “What kind of Man is this that even the winds and the sea obey Him!” (Matt. 8:23-29).
In another well-known story, the disciples were in the middle of the sea with the wind against them. In the middle of the night, Jesus walked on the water to them. Upon seeing the Lord, Peter asked if He could come to Him on the water. The Lord gave Him permission. Peter got out of the boat and started to walk on the water. But Peter saw the waves, became frightened, and began to sink. When Peter changed his focus, the waves started to win. We should remember the lesson and maintain our focus on the Lord.
Peter answered Him and said, “Lord, if it is You, bid me come to You on the water.”
He said, “Come.”
And when Peter got out of the boat, he walked on the water to go to Jesus. But when he saw the strong wind, he was afraid, and beginning to sink, he cried out, “Lord, save me!”
Immediately Jesus reached out His hand and caught him, and said to him, “O you of little faith, why did you doubt?”
And when they got into the boat, the wind ceased.
In the last days, difficult times will come. Expect greater instability in international and domestic environments. As the distinction between light and darkness, righteousness and evil, and the kingdoms of God and the world clash in starker contrast, periods of instability will become more frequent. But kingdom citizens have a better way. We can have stability in a world of turmoil. Jesus has paid the price. All we need is to trust and obey Him.
“Know this: In the last days, perilous times will come” (2 Tim. 3:1). {eoa}
Dr. James Russell is a professor of economics at Oral Roberts University.
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