In an attempt to rein in spiking inflation, the Federal Reserve Wednesday raised interest rates for the third time this year. The latest rate hike was a significant 0.75%. It’s an attempt to right-size the economy, as prices on a wide range of goods have increased and much become unaffordable for many.
James Hughes, Dean Emeritus at the Bloustein School of Planning and Public Policy at Rutgers University, discusses the effects of inflation and the Fed’s attempts to curb it — and the resultant rising interest rates. “We want to slow the economy in order to lower the inflation rate but there’s always a danger of the economy slipping into a recession. And historically when the Federal Reserve has raised interest rates as fast as they have this time, the end result was not a soft landing but a real economic downturn or recession,” Hughes said. But, he added, “Unrestrained inflation is a far worse problem than a short-term economic downturn.”
