Question for Fed: Has it waited too long to fight inflation?
Associated PressWASHINGTON — With inflation surging, unemployment falling and wages rising, some economists are warning that the Federal Reserve may have waited too long to reverse its ultra-low-rate policies — a delay that could put the economy at heightened risk. While Powell has many defenders who applaud the Fed’s willingness to keep interest rates low to help reduce unemployment after the pandemic recession, Friday’s U.S. jobs report for December raised alarms. And, they argue, the Fed’s willingness to keep rates low, even as the economy recovered, helped support a faster pace of growth and hiring, particularly compared with the grindingly slow recovery after the 2008-2009 recession. Yet many economists argue that the Fed remains too optimistic about inflation and that the rate will stay well above the Fed’s 2% inflation target this year. All three economists on Saturday’s panel — Steinsson; Jason Furman, a Harvard economist and former top adviser to President Barack Obama; and Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics and former Fed economist — said they thought inflation, under the Fed’s preferred measure, would remain at least 3.5% by year’s end.