Feldstein: FOMC Looking For Excuses Not to Raise Rates

The transcript discusses the Federal Reserve's considerations on tightening interest rates amidst rising inflation pressures. It highlights differing opinions within the Fed, particularly between Stanley Fischer and Lael Brainard, and the potential political and economic risks of raising rates. The Fed's strategy appears to aim for higher inflation to allow future rate cuts if needed. The transcript also addresses the adverse effects of low rates on investors and the challenges in accurately modeling inflation and growth. Finally, it touches on the role of asset prices in driving economic recovery and reducing unemployment.

What was the main reason for the Fed's internal debate on tightening monetary policy?

• Concerns about unemployment rates

• Differences in inflation forecasts

• Varying opinions on interest rate impacts

• Disagreements on economic growth projections

Why is the Fed hesitant to raise interest rates despite inflation pressures?

• Aim to decrease asset values

• Desire to increase unemployment

• Need to reduce government debt

• Fear of political backlash

What is one potential risk of maintaining low interest rates?

• Decreased inflation

• Increased government spending

• Investors reaching for yield

• Higher unemployment rates

How has the Fed successfully influenced the economy despite low growth rates?

• By reducing inflation

• By increasing asset values

• By lowering government debt

• By raising interest rates

What is the Fed's strategy for handling future economic downturns?

• Raising taxes

• Reducing inflation

• Cutting interest rates

• Increasing government spending