Federal Reserve policy shift

The “Fed-amental” Attribution Error

The Federal Reserve is shifting its focus from inflation to labor, with Jay Powell’s upcoming Jackson Hole speech likely outlining plans for loosening monetary policy. Despite recent inflation control, the effectiveness of traditional Fed tools is being questioned as the U.S. economy shows surprising resilience. Wealth concentration and the aftermath of COVID-19 have altered the impact of higher interest rates, leading to a stronger, more durable economy. The implications of this shift could be profound as the Fed reassesses its approach in a transformed economic landscape.