Bill Dudley, Columnist

The Fed Can Fight Both Inflation and Bank Contagion

The central bank doesn’t have to sacrifice its monetary policy goals to calm turmoil in the financial sector.

March 21, 2023 at 9:00 AM UTC

Bill Dudley is a Bloomberg Opinion columnist. A former president of the Federal Reserve Bank of New York, he is a member of Coinbase Global's advisory council.

Fix banks or fight inflation? Yes!
Photographer: Samuel Corum/Bloomberg

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The US Federal Reserve is facing increasing pressure to sacrifice its monetary-policy goals for the sake of financial stability, on the grounds that its interest-rate increases are to blame for the turmoil in the banking sector.

This is a false choice: The Fed can and should fight inflation and contagion at the same time.