The Fed’s flawed plan to avoid a recession

American economists are no longer hawks or doves, but optimists or pessimists. With annual inflation running at 8.6% in May, everyone agrees the Federal Reserve needs to raise interest rates sharply, and on June 15th it did so by 0.75 percentage points. The disagreement now is not over whether the Fed must fight inflation but how painful the consequences will be. Pessimists point to the long history of bouts of monetary-policy tightening being followed by recessions. Optimists say the Fed can bring inflation down to its 2% target merely by slowing economic growth.