The Fed's labeling of post-pandemic inflation as "transitory" lead to exacerbated inflation

From Investing.com: 2025-06-27 05:20:00

In 2023 and 2024, the Fed faced scrutiny for labeling post-pandemic inflation as “transitory.” However, data by 2025 showed a cooling of price pressures. The Fed’s late response to raising rates and halting quantitative easing exacerbated inflation due to government spending. Despite elevated stimulus, inflation and growth have subsided. Historical examples show how inflation episodes resolve. Recently, concerns about tariff-induced inflation were raised, but recent data shows no measurable impact. Tariffs may not lead to inflation due to flexible supply chains and consumer choices. Delayed rate cuts due to phantom inflation threats could harm the economy. Fed’s credibility lies in adapting to real-time data and avoiding repeating past mistakes.



Read more at Investing.com: The Fed’s ’Transitory’ Mistake Is Affecting Its Outlook