The Fed Is Upside-Down on Inflation and Thats a Big Risk - BitcoinEthereumNews.com
EkonomiThe Fed Is Upside-Down on Inflation and Thats a Big Risk07 / 19 / 2022Berita Bitcoin Ethereum The last time the U.S. suffered a nasty bout of inflation, in the 1980s, the economic emergency was seen as so dire the Federal Reserve, then led by Paul Volcker, jacked up interest rates by as much as three percentage points. Thats about six times the pace seen in a more typical rate-hiking cycle, where the Fed moves in 0.25 percentage-point increments. “Unless we respond to the increase, which could be quite large in this period, were going to have a real credibility problem,” Donald Win, former senior official of the Federal Reserve Board, told Volcker at the Fed meeting in March 1980, according to the meeting transcript. Eventually, the U.S. central banks main interest rate was some five percentage points over the inflation rate. The increase induced a sharp recession, but the intent worked: Inflation soon subsided. Now, theres a similar gap between inflation and the federal funds rate, but the relationship is upside-down. Inflation surged to a fresh four-decade high of 9.1% last month, and Fed officials are worried although several governors of the U.S. central bank have talked down the prospect of a 1 percentage point