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No, the fed has a dual mandate of controlling inflation and keeping unemployment low. They are absolutely not “trying to raise unemployment”. They are trying t

No, the fed has a dual mandate of controlling inflation and keeping unemployment low. They are absolutely not “trying to raise unemployment”. They are trying to control inflation and the expectation is that they will eventually have to stop raising interest rates (or lower them) because unemployment increases too much before they hit their inflation target.

fauxpause_ 4y ago
Yes they are. They’re very clear about this. They are trying to raise unemployment as a lever to reduce inflation. That is not to say they want unemployment to rise indefinitely, but they do want it to rise.
- kortilla 4y ago
  No they are not, they are very clear about this. They will keep raising interest rates until inflation hits their target. They will only stop before that if it starts to drastically impact employment.
- reducesuffering 4y ago
  Fed mandate is clear: Price stability and low unemployment. Their main lever is interest rates. Interest rate increases do not necessarily increase unemployment. Now that unemployment is low enough, their priority is inflation, and for that they will raise interest rates. If higher unemployment is a side effect that leads to 2% inflation, then their mandate is still achieved. But rest assured, if inflation comes down to 2% with unemployment flat or improved, it's all the better according to them. Their intention is not "more unemployment -> less inflation", it's just "less inflation," by any means necessary. They will accept causing higher unemployment to achieve 2% inflation because it's a balancing act between their two goals. "Powell said he hoped that a slackening of demand might reduce pressure in the labor market without raising unemployment."[0] [0]https://www.bloomberg.com/opinion/articles/2022-07-29/higher-unemployment-is-coming-and-the-fed-should-get-ready?leadSource=uverify%20wall https://www.bloomberg.com/opinion/articles/2022-07-29/higher...
solumunus 4y ago
They have said, literally, that they will not stop with rate hikes until unemployment is significantly higher.
- kortilla 4y ago
  No, they have said, literally, that they will not stop rate hikes until they hit their inflation target. They will also consider stopping if it starts to interfere with their max employment mandate. The critical difference that you are missing is that if inflation stops before employment declines, they will stop raising rates.

fauxpause_ 4y ago

Yes they are. They’re very clear about this. They are trying to raise unemployment as a lever to reduce inflation. That is not to say they want unemployment to rise indefinitely, but they do want it to rise.

kortilla 4y ago
No they are not, they are very clear about this. They will keep raising interest rates until inflation hits their target. They will only stop before that if it starts to drastically impact employment.
reducesuffering 4y ago
Fed mandate is clear: Price stability and low unemployment. Their main lever is interest rates. Interest rate increases do not necessarily increase unemployment. Now that unemployment is low enough, their priority is inflation, and for that they will raise interest rates. If higher unemployment is a side effect that leads to 2% inflation, then their mandate is still achieved. But rest assured, if inflation comes down to 2% with unemployment flat or improved, it's all the better according to them. Their intention is not "more unemployment -> less inflation", it's just "less inflation," by any means necessary. They will accept causing higher unemployment to achieve 2% inflation because it's a balancing act between their two goals. "Powell said he hoped that a slackening of demand might reduce pressure in the labor market without raising unemployment."[0] [0]https://www.bloomberg.com/opinion/articles/2022-07-29/higher-unemployment-is-coming-and-the-fed-should-get-ready?leadSource=uverify%20wall https://www.bloomberg.com/opinion/articles/2022-07-29/higher...

solumunus 4y ago

They have said, literally, that they will not stop with rate hikes until unemployment is significantly higher.

kortilla 4y ago
No, they have said, literally, that they will not stop rate hikes until they hit their inflation target. They will also consider stopping if it starts to interfere with their max employment mandate. The critical difference that you are missing is that if inflation stops before employment declines, they will stop raising rates.