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Is a Recession Necessary to Tame Inflation?

Politico: “Federal Reserve Chair Jerome Powell said last week the central bank isn’t trying to cause a recession by raising interest rates and doesn’t think it needs to as the Fed aggressively moves to get decades-high inflation under control.”

“Some economists — including former Treasury Secretary Larry Summers — say Powell is being much too optimistic about the Fed’s ability to tame prices without pushing unemployment much higher. The implication: The Fed chief, who has sought to elevate the central bank’s focus on boosting the labor market, may be forced to accept millions of job losses and a significant recession to curb inflation.”

Said Summers: “Unless we have a set of very surprising and positive developments, we’re not likely to see the inflation rate come all the way down to the Fed’s target without there being some level of meaningful economic distress.”

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