Center for American Progress

Opinion: Expecting the Fed to solve inflation on its own ignores important root causes that the Fed can’t touch
In the News

Opinion: Expecting the Fed to solve inflation on its own ignores important root causes that the Fed can’t touch

Marc Jarsulic examines why relying on the Federal Reserve alone is insufficient to reduce inflation.

In response to continuing core inflation, the Federal Reserve raised the federal funds rate by 75 basis points during this week’s meeting of the Federal Open Market Committee. This will raise the cost of credit throughout the economy, reduce aggregate demand, and lead to declines in output and employment.

This week’s rate hike may not be the last, given its price-stability mandate, the Fed will keep to its standard script, raising rates until declining economic activity translates into a lower core rate.

The above excerpt was originally published in MarketWatch. Click here to view the full article.

The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.

Author

Marc Jarsulic

Senior Fellow; Chief Economist

You Might Also Like