Fed Unity Is Showing Cracks at a Critical Time
The rate-setting committee has mostly stuck together in the past year. A mild second-half recession would test that solidarity.
Needs everyone on the same page.
Photographer: Olivier Douliery/AFP/Getty Images
Disagreement is bubbling up at the Federal Reserve as dueling growth and inflation risks pull policymakers in different directions. If you think the debate seems fiery now, just wait until the third quarter, when recession may be at the nation’s doorstep.
Last week offered a taste of the brewing divisions. On Tuesday, Federal Reserve Bank of Chicago President Austan Goolsbee, a dovish first-time voter on the rate-setting committee this year, called for “caution and watchfulness and prudence” in monetary policy after the failure of two banks in what seemed like an implicit endorsement of a pause to rate increases. As he put it: