Fed rate hikes won't bring down inflation as long as government spending stays high, paper says
John C. Williams, president and chief executive officer of the Federal Reserve Bank of New York, Lael Brainard, vice chair of the Board of Governors of the Federal Reserve, and Jerome Powell, chair of the Federal Reserve, walk in Teton National Park where financial leaders from around the world gathered for the Jackson Hole Economic Symposium outside Jackson, Wyoming, August 26, 2022. Jim Urquhart | Reuters Federal Reserve Chairman Jerome Powell proclaimed Friday that the central bank has an "unconditional" responsibility for inflation and expressed confidence that it will "get the job done." But a paper released at the same Jackson Hole, Wyoming summit where Powell spoke suggests that the Fed can't do the job itself and actually could make matters worse with aggressive interest rate increases. In the current case, inflation is being driven largely by fiscal spending in response to the Covid crisis, and simply raising interest rates won't be enough to bring...