Commentary The Federal Reserve’s policymaking body, the Federal Open Market Committee (FOMC), voted last week to raise its benchmark policy range for federal funds by a quarter-point. This was widely expected. In fact, officials have for months been preparing everyone for this development. In the lead-up to the move, FOMC members have been clearly stating their reasons behind it—and the expectation laid out for many more still to come. To begin with, consumer prices are rising, on average, at rates the country hasn’t seen in forty years. By itself, this wouldn’t warrant more than continued monitoring. The sharp (and painful) spurt in the CPI has been due to temporary factors owing to last year’s major supply shock which still needs work, and time, to get figured out. Yes, transitory. What has the Fed worried now is if consumers and businesses might normalize to this “transitory” shock which has managed to …
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