Washington, D.C. — Michael Madowitz, economist at the Center for American Progress, released the following statement today on the Federal Open Markets Committee (FOMC) meeting that concluded today:
While it’s a relief to see the Fed continue to hold off on rate hikes, today’s decision to shrink the Fed’s balance sheet is both a disappointment and another reason to be concerned about the desire for normalcy driving policy. While this move is largely symbolic, it still represents a move to slow inflation when all indications are that it will remains below the Fed’s stated target for some time to come. Moves like this hurt the credibility of the Fed’s inflation target. With low interest rates and a low inflation target, the credibility of the Fed’s inflation target will be crucial in fighting future recessions. Unless the Fed adopts a new targeting framework, premature moves to tighten policy threaten the Fed’s ability to react to future recessions.
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