The Fed will decide on money supply. That will affect interest rates. – Twin Cities

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Tuesday’s meeting of the Federal Reserve’s policy-making Open Market Committee will be difficult.

The FOMC must address sharp measured inflation for the first time in over 20 years just after first-quarter 2020 output dropped following several quarters of strong growth. What should it do? Finally tighten money availability after 15 years of looseness unprecedented in the history of the world? Or once again bow to fears of recession?

Ed Lotterman

That is a loaded question. It has been obvious for more than a decade that the zero-interest-rate-policy adopted in panic after the 2007-09 financial market meltdown had to end sooner or later. The FOMC finally took a few baby steps, but then COVID-19 hit. Their reaction was unprecedented in Fed history, a 36 percent increase in the money-supply metric called M2 over 24 months from March 2020 to March 2022.

The media, including the financial press, paid little attention to such history making. All the…

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