Will the Fed Overdo It?
Although inflation has begun to fall, the US Federal Reserve is not satisfied with the current macroeconomic situation, implying that it would rather to do too much than too little. But with several problematic alternative scenarios coming into view, policymakers will need to remain acutely sensitive to new data.
CHICAGO – The US Federal Reserve is clearly determined to bring down inflation. But no one really knows how high it will have to raise its policy interest rate – and how long it will have to keep it there – to achieve its objective. Many are thus wondering whether the Fed will bring on a recession.