The aftermath of the coronavius pandemic has created so much ambiguity about the economy that Federal Reserve officials could find themselves seriously divided over the proper course of action. That's a rare experience for the central bank.
The aftermath of the coronavius pandemic has created so much ambiguity about the economy that Federal Reserve officials could find themselves seriously divided over the proper course of action, a rare experience for the central bank. Divisions might be revealed in the open next year.
Fundamental questions are being debated among Fed officials. Is the labor market tight or loose? Will the spike in inflation be temporary or long-lasting? Is the health of the recovery still uncertain? But next year, the four regional Fed presidents who have a vote on policy are all heavily hawkish, Englander notes. He sees the possibility there could be as many as five dissents or more to policy decisions.
“The Fed did not tell us over what time period they wanted inflation to average 2%. They did not say there is a level of periodic inflation that would be too high,” he said. A period of calm could persist for the first half of 2022 and the Fed can “wait and see” about inflation, Englander said.
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