Sonal Desai says the Fed has kept monetary policy too loose for too long
The investor reckons its plan to tackle inflation rests on two shaky assumptions
INFLATION AT 40-YEAR highs poses the toughest of policy challenges. Yet America’s Federal Reserve still hopes to meet it with an easy solution: bring the policy rate close to 3%, and as adverse supply shocks fade inflation will revert to the Fed’s 2% target. No need for a sharp monetary tightening à la Paul Volcker. No need to risk a recession or to trigger a significant rise in unemployment.
This article appeared in the By Invitation section of the print edition under the headline “Sonal Desai says the Fed has kept monetary policy too loose for too long”
From the May 28th 2022 edition
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