Fed’s Critics on Inflation Should Now Champion July Cut
Policymakers were roasted for delaying interest rate increases in 2021 and 2022 as prices surged. Now, they risk falling behind the curve with cuts, too.
Is the Fed falling behind the curve again?
Photographer: Tierney L. Cross/Bloomberg
Back in 2021, legions of critics lambasted the Federal Reserve for failing to take proactive and forward-looking steps against the emerging inflation threat. Curiously, many of them have gone silent on the risk that the Fed might get caught flatfooted again, this time by failing to cut interest rates soon enough in the face of weaker inflation and a cooling labor market.
Lawrence Summers, the former US Treasury Secretary and a paid Bloomberg TV contributor, was perhaps the most notable critic of the “behind the curve” Fed a few years back. As recently as a few months ago, he was still warning against rate cuts and floating the idea that the central bank’s next move could be a hike. Summers isn’t an island unto himself, however, as about a third of economists surveyed by Bloomberg saw one or no cuts this year.