The Federal Reserve is expected to raise rates by three-quarters of a point to a range of 3% to 3.25% – the highest level in 14 years.
Robert Rattle, professor of law, is an expert in financial and monetary law and in economics. He is available to discuss how another interest rate hike could impact the economy as well as the recent summary of the New York Fed’s economic projections and the “pain” the central bank is ready to inflict on workers who are not responsible for the current underlying inflation.
“Federal Reserve Chairman Jerome Powell will confirm this week what he has previously promised and what the market has already priced in to trade: that the Federal Open Market Committee (FOMC) will raise the policy rate by 75 basis points additional.
“More interesting than that is the New York Fed’s recent clarification of the Fed’s policy framework – its summary of economic projections – for the future, and related how much ‘pain,’ as Chairman Powell might put it, the central bank is ready to inflict on workers who are not responsible for the current underlying inflation.
“In terms of the summary of economic projections, New York Fed President John Williams recently announced, in effect, that the FOMC nominal “neutral” policy rate target will be 50 basis points at the above expected inflation in the future. It’s pretty strict.
“As far as central bank infliction is concerned, how ‘painful’ this will prove will depend, in large part, on how quickly and effectively the recent productivity-enhancing legislation passed by the Congress – Infrastructure, CHIPS Act, Inflation Reduction Act, etc. – increase the number of jobs that offer good living wages, the kind most Americans enjoyed before the globalization frenzy of the 1990s and early 2000s hit begins to send our industries abroad.
“Let’s hope either that these supply-side transformations happen quickly, or that the Fed and Congress start looking as eagerly at the record earnings component of consumer prices as they are at the wage component much less important, which follows inflation rather than leading it.
Cornell University has dedicated television and audio studios available for media interviews.
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