the-federal-reserve-raising-interest-rates-is-unwelcome-and-unnecessary_blog_post_fullwidth
By Thomas Palley
Cross-posted from the AFL-CIO economy blog
Wednesday’s decision by the Federal Reserve to raise interest rates is unwelcome and unnecessary. As admitted in its statement, investment remains soft, growth is only moderate and inflation expectations are little changed. Moreover, the economy confronts financial headwinds from the recent jump in long-term interest rates and an even stronger dollar.
The Federal Reserve seems to be relying on old economic thinking that should have been discarded after the financial crisis. That poses a danger the economy will be slowed before full employment is reached, putting a stop to workers reclaiming their fair share.
If the Federal Reserve is worried about financial market exuberance, it should use its regulatory tools and not the blunderbuss of higher interest rates. Financial markets must not be allowed to stampede the Fed into raising rates.
An alternative strategy for monetary policy is briefly described here:
The Federal Reserve Must Rethink How it Tightens Monetary Policy

Latest Tweets

  • TOMORROW: PERI presents a live webcast of "Macroeconomic Policy in the Shadow of the Great Financial Crisis: Insigh… https://t.co/DPIIx8piQl
    6 days ago
  • The WSSA has extended their call for papers until December 7th. Please submit your paper proposals ASAP if you want… https://t.co/AOkHXPlJIW
    1 week ago
  • Good news! The URPE @ EEA paper and panel submission deadline has beeen extended until Sunday, November 17th. All t… https://t.co/iRJMCWZ8Ru
    4 weeks ago