Is the Federal Reserve Behind the Curve?

On 8 October the American Enterprise Institute hoste a panel, chaired by Alex Polack, featuring (in order) Don Kohn, William White, Nathan Sheets and Desmond Lachman. White first evaluated the issue from the shorter-term perspective seemingly preferred both by analysts and the Federal Reserve itself. He concluded that the arguments for easing cautiously, if at all, dominated those for easing aggressively. He then went on to assert that a longer term perspective was required in this evaluation because, in Hyman Minsky’s words, “short term stability breeds longer term instability”. The Fed and central banks more generally have always been behind the curve because they have paid chronic inattention to supply side issues and to the longer term implications of thier policies for financial stability. Looking forward, negative supply shocks will increase the risks of a “tipping point” into either deflation (arising from excessive private debt) or high inflation (arising from excessive public debt).

https://www.aei.org/events/is-the-federal-reserve-behind-the-curve/