The Fed's Mistake
9 Pages Posted: 22 Mar 2021
Date Written: August 1, 2018
In December 2015, the Federal Reserve raised interest rates above the zero lower bound for the first time in seven years. Over the next 2½ years, six more hikes occurred, bringing the target range of the federal funds rate to 1.75% to 2% by June 2018. Although each hike has come with considerable debate both within and outside of the Fed, there has been little attempt to look back with hindsight and data to judge whether these decisions appear correct in retrospect. This analysis will provide that retrospect and argue that the Fed in fact raised rates too quickly.
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