Inflation, interest and the housing paradox

Paul Krugman

One of the occupational hazards of my profession is having people ask me what is going to happen to the market. I am never sure whether to give the answer attributed to various famous financial titans – it will fluctuate – or to reply, more accurately, “God knows”. But some predictions seem safe. Clearly, the Federal Reserve will raise interest rates repeatedly over the months ahead, continuing that process until there are clear signs that inflation is coming down to tolerable levels.

But isn’t the Fed far behind the curve? Inflation is at a 40-year high, yet the Fed has only begun to hike. Shouldn’t it greatly raise rates now, now, now?