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Inflation is a problem. The Fed must NOT cut interest rates.

Michael Busler
3 min readDec 16, 2024

Jerome Powell is the next Arthur Burns.

The Federal Reserve’s Open Market Committee will meet again this week to determine what the Federal Funds Rate should be. Most economists and nearly all of Wall Street expect the Fed to cut interest rates by another 25 basis points. The question is why.

Recall in June 2022, the Fed finally realized that price stability was their primary policy goal. The Fed forgot about that goal from January 2021 to June 2022 when they kept interest rates near zero and continued their massive, although eventually scaled down bond-buying program. That policy coupled with the massive federal government spending deficits and the restrictions on the supply of energy, caused inflation to skyrocket.

Not since the early 1980s had the US seen inflation of more than 4% for any extended period. In fact, for the entire 21st century, annual inflation as measured by the Consumer Price Index, was mostly in the 2% to 2 ½% range. At the end of 2020, inflation was 1.4%.

Because of the misguided Monetary, Fiscal and Energy Policies inflation soared to 9.1%. But in June 2022 the Fed began a year-long policy to aggressively raise interest rates to bring inflation down. They stopped raising interest prematurely after July 2023.

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Michael Busler
Michael Busler

Written by Michael Busler

Dr. Busler is an economist and a public policy analyst. He is a Professor of Finance at Stockton University. His op-ed columns appear in Townhall, Newsmax.

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