Progressives Press Price Controls
Last week, a group of progressive Democrats and CBC members introduced H.R. 8658, legislation designed to press the President to institute price controls and give him greater authority to do so. The bill is supported by major labor unions and consumer/public-advocacy groups which argue that price controls are essential to prevent profiteering in goods such as energy and food and services such as rental housing. The measure includes no express provisions affecting financial services, but additional discussion of it is likely to provoke calls also for lower and fewer bank fees, higher consumer deposit rates, and reduced mortgage rates.
FRB-Dallas: Fed Policy Hiked Current Inflation
A new Federal Reserve Bank of Dallas study reaches a conclusion likely to exacerbate criticism of current monetary policy: the 2020 flexible-average inflation targeting (FAIT) construct increased inflation over what would otherwise have been predicted by 1.8 percentage points on average. Models-based and thus an assessment FAIT on a preferred construct, the paper also finds that FAIT may have large effects over short time periods due to delayed intervention. These delays can, the study notes, have the FOMC’s intended effect of preventing the Fed from over-reacting to transitory shocks; the study does not provide insights into whether delays and the 1.8 pp increase was appropriate given that inflation did not prove transitory and may now have become more difficult to combat.