Christopher Waller of the Federal Reserve pledged Tuesday to make sure that rate-setting groups don’t make mistakes in inflation like it did during the 1970s.
In 1994, Neel Kashkari said in a panel discussion that although the central bank was tough on inflation, it wilted whenever tighter monetary policy led to an increase of unemployment.
Waller stated that he, and his coworkers would continue to follow up on this time. its intentions to raise interest ratesThe Fed will not allow inflation to fall below its target levels until then. Two rate increases by the central bank this year have been made, with a move of half a percentage point last week.
Waller stated, “We all know the consequences of the Fed’s failure to take seriously inflation during the 1970s and that we aren’t going to let it happen again.”
Inflation running at its hottest paceIn more than 40 years. President Joe BidenInflation is now the greatest economic problem, and the Federal Reserve should be credited with helping to combat price rises.
Biden acknowledged that the central bank was politically independent, however he stated, “The Fed needs to do its job. It will do its jobs.” “I am convinced that it will.”
Waller made the analogy to the Fed in the 1970s and early 1980s. This Fed eventually stopped inflation through a series massive interest rate increases when Chairman Paul Volcker became the Fed’s chairman. However, Waller said that he does not believe the current policymakers should be as aggressive.
Waller stated that they had no credibility and Volcker said “I have to do the shock and awe.” We don’t currently have this problem. “This is not an “awe-inspiring Volcker moment.”
Volcker’s moves pushed the Fed’s benchmark rate for interest rates to near 20%, and the economy was plunged into recession. Waller stated that he talked to the ex-chair before his passing and Volcker told him, “If I knew what was about to happen, it would never have happened.”
Waller stated that he believes the economy is capable of enduring. the path of rate hikes this timeIt will be gentler than in the Volcker age.
The labor market is healthy. “The economy is doing so good,” he stated. If you are worried about negative reactions, this is the right time. The economy has the ability to take them.
Thomas Barkin, Richmond Fed president, also supported the goal to control inflation. He said that the probable path would see the Fed rate at between 2% and 3%. “We can then decide whether inflation is still high enough to require us to slow down the economy.”