The Fed has much bigger things to worry about than inflation. (via the Economic Policy Institute)
, it risks choking off economy-wide spending. When customers dry up, businesses stop hiring and unemployment rises.
If it keeps interest rates too low, then it risks spurring too much spending. When customer demand exceeds the economy’s ability to produce goods and services ,arguments about whether the Fed should have raised rates faster or slower over the past 18 months , including last week's 0.25% increase. What’s clear today is that inflation is decelerating rapidly and that going forward, the more pressing risk is an economic slowdown. For overall income growth, recessions are worse than even periods of high inflation, period. And the damage recessions cause is also highly regressive — hurting the most vulnerable and historically disadvantaged groups the hardest. Given all of this, the Fed should stand pat on rate increases for a while.
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