Federal Reserve Chair Jerome Powell stated on Tuesday that a prolonged period of restrictive monetary policy may be necessary, refraining from offering explicit guidance on a rate-cutting strategy. Economists interpreted this as a clear indication that the central bank is likely to maintain a “higher for longer” approach.
The Hawkish Schiff: Economist Peter Schiff, in a post on X (formerly Twitter), challenged Powell’s characterization of the current monetary policy as restrictive, asserting that it remains loose. Schiff advocated for rate hikes, expressing concerns that prolonged loose policy would exacerbate inflationary pressures.
“The longer the Fed maintains its current policy, the further away from 2% inflation will rise,” he said.
Schiff’s remarks come against the backdrop of a robust economy and strong job growth.
However, some economists, like Nobel laureate Paul Krugman, argue that consumer price inflation may not accurately reflect economic conditions, suggesting alternative measures such as the harmonized index of consumer prices, which excludes the owner-equivalent rent.
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Higher For ...