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Ramesh Ponnuru

The Moral Case for Higher Interest Rates

The human toll of unemployment, while severe, must be balanced against the more diffuse costs of ever higher inflation.

Stay the course, Mr. Chairman.

Stay the course, Mr. Chairman.

Photographer: JIM WATSON/AFP

Federal Reserve Chair Jerome Powell’s efforts to cool down the economy are causing progressive criticism to heat up. He has been accused of wanting a “brutal” recession, trying to “throw millions of Americans out of work” and using “dangerous” rhetoric. And those are the comments of just one senator, Elizabeth Warren of Massachusetts.

The criticism of the Fed’s interest-rate increases sometimes veers into demagoguery, just as did former President Donald Trump’s attacks on Powell when the Fed raised rates. But the progressives’ question deserves an answer: How can tightening monetary policy be morally justified even though it is expected to have a negative effect on employment?