Fed's Inflation Control: Behind the Curve?
The analysis criticizes the Federal Reserve's delayed response to inflation in the current cycle compared to historical averages. While recent cycles saw a more prompt response, the Fed began hiking rates 20 months after inflation began rising in 2020. This analysis supports allegations of the Fed being behind the curve.
The Federal Reserve's performance in controlling inflation has come under scrutiny. A comparison with historical averages reveals the Fed's delayed response in the current cycle, following a 20-month wait after inflation began to rise in 2020, supports criticism from the Trump administration.
Historically, the Fed responded more swiftly, with hikes commencing an average of five months after an inflation surge. Similarly, rate cuts historically began two months before inflation peaked, yet the recent cycle saw hikes commence late and cuts even later.
Experts debate whether the Fed is still behind the curve or aligning with other economic priorities, such as unemployment. Despite critiques, Fed's credibility remains noted. Notably, inflation since 2019 ranks among the highest globally, fueling discussions about the central bank's independence.
(With inputs from agencies.)
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