Fed raises interest rates, as needed: CEI analysis

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The Federal Reserve decided to raise the federal funds rate a quarter of a percent, as expected, at today’s Federal Open Market Committee meeting. This was the 11th increase in 17 months. CEI senior economist Ryan Young supports the move:

“Inflation is not going back to its 9 percent peak, barring another COVID-scale stimulus binge from Washington. But core CPI inflation, at 4.8 percent, is still more than double the Fed’s 2 percent target. That means the Fed has more tightening to do. A strong labor market and surprisingly solid economic growth should give the Fed courage to fight inflation without sparking a recession.

“A strong economy should also insulate the Fed from political pressure to go back into stimulus mode in time for the next election.

“As long as Congress and President Biden can restrain big-spending impulses, the Fed should finally be able to get inflation back under control, though that could easily take the rest of the year or longer.”