The Federal Reserve is cognizant of lags in monetary policy, and the potential impact of the cumulative 500 basis points increase in the cost of money, coupled with the alarming decline in various monetary aggregates to date, on employment and inflation. The monetary authorities are not, however, ready to concede that enough has been done, yet they don’t want to do more than necessary. I’m sure that they are concerned with the immediate outlook.
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By Hubert Marleau