The Federal Reserve is in a deep hole of its own making as its top policy committee meets this week to announce the start of a long-anticipated cycle to raise interest rates. Inflation is at a 40-year high and still accelerating, the Fed’s inflation-fighting credibility is damaged, and it has lost control of the monetary policy narrative.
Add to that the new host of uncertainties facing the global economy because of Russia’s invasion of Ukraine and it should come as no surprise that members of the Federal Open Market Committee have expressed divergent views in the run-up to their deliberations. Keeping the FOMC united is a tricky challenge for Chair Jerome Powell. Yet it pales in comparison to the importance of making the right decision among less-than-ideal policy options.
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