The Federal Reserve shocked no one Wednesday when it announced another 25 basis-point hike to interest rates. Yet our lack of surprise doesn’t mean a lack of questions about the central bankers’ continuing anti-inflation warpath.
Chairman Jay Powell took great pains to leave the impression that the Fed has no problem with a strong labor market and the increased worker flexibility that comes out of it, saying that it was “a good thing that the disinflation that we have seen so far has not come at the expense of the labor market,” even as he continued to make it clear that the central bank’s explicit goal was to tamp down on wage growth.
Perhaps the chairman doth protest too much. While the most recent rate hike was lower than prior ones and the Fed indicated it was slowing down, it had consistently remained more hawkish on inflation than the general economic consensus. Powell yesterday pointedly refused to “declare victory or think we really got this,” when it comes to taming inflation, despite months of positive indicators.
