In the last 20 months, United States Federal Reserve has put his arsenal of monetary politics in the crosshairs of a single goal: restoring the job, especially for low-income people whose conditions were most impacted during the pandemic.
The interest rates remain anchored near zero and central bank debt purchases are still ongoing, despite inflation accelerating and unemployment has been falling rapidly, a combination that is beginning to resonate with those who believe that, the way things stand, the central bank could be doing more harm than good in its goal of reviving the working market.
In a call for the Fed to take a swift turn toward stricter policy, the prominent Democratic economist and former chairman of the Council of Economic Advisers Jason Furman He said on Wednesday that the central bank was not in tune with the economic situation.
Also, if you have to catch up with a more drastic policy change and accelerating cycles of interest rate increases in the future, you will hurt those you apparently intend to help.
“An overheated economy helps vulnerable workers the most,” Furman, now a Harvard University professor, wrote in a presentation prepared for the Peterson Institute for International Economics.
“But a recession hurts those vulnerable workers the most … Lowering inflation a little now could help obviate the need for even more severe and painful steps down the road and reduce the possibility of a recession with millions of jobs that could be lost.” , Held.
His call on the Fed to accelerate the end of bond purchases and establish a “default” rate hike plan in the first half of 2022 is the latest salvo in the current debate from economists, investors, elected officials and legislators on the risks posed by inflation at 30-year highs, and how the central bank should respond.
Investors currently expect the Fed to raise rates perhaps three times next year. The Federal Reserve is divided on whether it will need to implement credit cost increases in 2022, a situation that Furman says stems from “wishful thinking” about inflation by at least two agency officials.
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The rapid pace of price increases was initially seen as a fleeting effect of the reopening after the pandemic, but it has been persistent and greater than anticipated.
The issue has also started to hit the popularity of President Joe Biden, who ponders whether to reappoint the current Fed chairman, Jerome Powell, for a second four-year term or to replace him with Governor Lael Brainard.
A decision is expected before the holiday of the Thanksgiving Day, the White House said Wednesday, and Biden’s position on the announcement – his “focus” of the appointment as Furman put it – could indicate whether the administration sees inflation as a risk to the economic outlook and to its plans for new investments. significant social and infrastructure expenditures.
Some economists, such as Nela Richardson of payroll processor ADP, support arguments similar to Furman’s, noting that inflation itself is undermining low-income families who are less able to wait until mid-2022 for the peak. of price increases dissipate.
Other experts note that the dynamics that have reliably kept prices low in recent years, such as the deep discounts available online, have been reversed.
A monthly software manufacturer’s online price index Adobe Inc posted its seventeenth consecutive increase in October, reversing years of steady decline, and is already up 1.9% year-on-year.
“For consumers, the place where they used to expect better and better product value is disappearing,” said Taylor Schreiner, director of Adobe Digital Insights, who noticed fewer discounts and offers, even in the Christmas season.
Reference-www.eleconomista.com.mx