High inflation comes with a heavy economic price, but so can the Federal Reserve’s attempts to get it under control.
The Fed has a tried-and-true method for curing inflation: raising interest rates. But it’s a blunt instrument, with no room to fine-tune specific corners of the economy. Hiking borrowing costs is only successful because it slows demand across the board — and along with it, the economy and likely hiring, experts say. That’s despite U.S. central bankers projecting 10 rate hikes by 2023 yet unemployment holding at a half-century low, according to their latest economic projections.
“They’re trying to slow down the overall economy, and that would include firms’ appetite to hire, without ever saying that out loud,” says Luke Tilley, chief economist at Wilmington Trust.
