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Why the Federal Reserve Keeps Underestimating Inflation

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Why the Federal Reserve Keeps Underestimating Inflation

Bloomberg Opinion May 2, 2022
EconomicsMonetary Policy

A Q&A with Dartmouth economist Andrew Levin about the economic risks the U.S. is facing and why the central bank got it so wrong.

The Fed messed up. Big time. After almost 40 years of low, predictable price growth, inflation is back: 8.5% at last count and it may go higher still. Some of the inflation is related to pandemic re-opening, but some of it came from serious policy errors. Now the Federal Reserve faces some hard choices. It may even need to cause a recession to bring inflation back to manageable levels. Can it manage that without getting the country into deeper economic trouble?

Continue reading the entire piece here at Bloomberg Opinion (paywall)

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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.

Photo by pabradyphoto/iStock

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