From WSJopinion: A growing chorus is urging the Federal Reserve to slow down lest it “break things.” Fortunately, the Fed is acting more wisely than its legions of critics, writes jasonfurman.
Review & Outlook: Inflation is proving much more durable than Joe Biden’s financial advisers hoped, with data from the Labor department vindicating the Fed's determination to keep going. Images: Getty Images Composite: Mark KellyA growing chorus is urging the Federal Reserve to slow down lest it “break things.” If you’re paying attention, you should be nervous about growing financial strains in the U.S. and around the world. But the underlying U.S.
Those urging the Fed to slow down make four reasonable but uncompelling arguments. The first is that monetary policy works with long and variable lags. Let the medicine that has already been administered do its work before continuing to step up the dosage. One issue with this view is that two-thirds of the tightening, as measured by the Goldman Sachs financial conditions index, actually happened more than five months ago. A lot of tightening is already working, and it isn’t doing enough.
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