Former Council of Economic Advisers Acting Chairman Tyler Goodspeed argues the Federal Reserve is 'so far behind the curve' that three interest rate hikes won't be enough to combat inflation.
TYLER GOODSPEED: I don't think three rate hikes are going to do it. Look, the Fed is so far behind the curve on this. I mean, you look back to their forecasts midway through 2021, their forecasts were still wildly off where we ended up. And you know, this isn't like 2018. In 2018-2019, the Fed was preemptively tightening. Inflation was nowhere to be sight, but they were preemptively tightening.
And they could afford then to take a strategic pause when markets said, ‘Whoa, what are you doing? Donald Trump is actually right here.’ I don't think they can afford to take a strategic pause if markets go down 10 percent, 20 percent, because when you have seven percent inflation, they're going to have to tighten regardless of what markets do. And indeed, they kind of need tightening financial conditions at this moment.
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