Why it is better for the US Fed to slow down
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By tightening financial conditions enough to curb inflation, the Fed has contributed to a spate of bank failures.
PHOTO: REUTERS
Jeff Sommer
Beating inflation is crucial for the Federal Reserve. But so is promoting full employment. And don’t forget about preserving the stability of the financial system. Each of these goals is exemplary on its own. But put them all together in the current environment and you get head-spinning problems.
By tightening financial conditions enough to curb inflation, the Fed has contributed to a spate of bank failures. And it may well be engendering a burst of financial instability that could spill into the larger economy in the form of rising unemployment.
