INFLATION: What Now for a Fed That Has Fallen Behind the Curve Again?

via worldnewsera:

With several hotter-than-expected inflation numbers coming after two successive downshifts in interest-rate increases, an interesting debate is raging as to what the Federal Reserve should do next: Go back to a larger rate increase (50 basis points) or maintain a slower pace (25 basis points) but keep higher rates for longer.

Already an analytically tricky issue, this has become even more complicated by the Fed now falling behind on its inflation fight for the third time in just two years and what that implies for its already damaged credibility.

The argument for the Fed to return to a 50-basis-point increase later this month is based on the recent slew of macroeconomic numbers that suggest inflation is becoming stickier, and not just in the service sector.

The Fed was slow to react, failed to react forcefully enough when it finally did act, and then slacked off too soon.

We are primarily funded by readers. Please subscribe and donate to support us!

But you don’t need me to tell you that, assuming you’ve actually bought stuff the last couple of years.



h/t SG



Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.