Source: Macroeconomic Policy Nexus
by David Beckworth
“It is not easy being a central banker in a world plagued by supply shocks. These disturbances push economic activity and inflation in opposite directions, forcing difficult tradeoffs between full employment and price stability. Fed officials now face such a challenge with the war in the Middle East. The resulting reduction in oil production could dampen economic activity while temporarily raising inflation. In this environment, it may be tempting to ease monetary policy to cushion the blow. But doing so would risk further stoking inflation. And if the public were already sensitive to inflation, such easing could unanchor expectations and make matters worse.” (03/24/26)
https://macroeconomicpolicynexus.substack.com/p/the-fed-already-has-what-it-needs