Economists are torn on whether the Fed's pause will backfire | CNN Business

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The Federal Reserve is taking its first pit stop after 10 consecutive rate hikes aimed at bringing inflation down from what was a 40-year record high. Economists are torn on whether the pause will backfire.

The Federal Reserve is taking its first pit stop after 10 consecutive rate hikes aimed at bringing inflation down from what was a 40-year record high. Fed Chair Jerome Powell said the rate hike pause will give officials more time to evaluate the effects rate hikes have had on the economy so far. But he left the door open for the possibility of more rate hikes at future meetings.

On top of which, “they seem determined to avoid the mistake of the 1970s of easing back too quickly as inflation ebbs and unemployment rises,” said Donald Kohn, a former Fed vice chair who began his career as an economist at the central bank in 1970. The Fed’s pause “doesn’t necessarily have adverse implications for inflation,” he said. “That depends on what comes next.” Inflation is still too high for the Fed The Fed’s chief goal of 2% inflation hasn’t materialized.

 

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