Inflation and the Fed’s Failure to Act

Source: EconLog
by Thomas Hogan

“Prices are rising at the highest rates in 40 years. The Federal Reserve’s overly expansionary policy is the main culprit. Yet the Fed has taken only minimal actions to address this issue. After more than a year of inaction, the Federal Open Market Committee (FOMC) finally started raising interest rates. It increased its federal funds rate target by 25 basis points in March, 50 basis points in May, 75 basis points in June, and another 75 in July. However, these rate increases were too late and too small to stem the current wave of inflation. The FOMC will need more drastic actions to get inflation down and signal to the public that it is taking inflation seriously. They should also seize this opportunity to implement long-term policy reforms.” (07/29/22)