Fed: the risk of doing too much

For its fourth meeting in a row, the FOMC will continue tightening monetary policy next week. A 75bp rate hike is expected, a pace unmatched in the history of the post-Volcker Fed, faster than in 1994. By adopting this tack, the Fed aims to correct the mistake it made in underestimating the size and duration of the inflation shock. In 2021, the Fed gave too much weight to its full employment target, not enough to its price stability mandate. It is legitimate to wonder whether it ...