Interest rates or inflation could ease pressure, David Andolfatto argues

Interest rates or inflation could ease pressure, David Andolfatto argues
Interest rates or inflation as release valves

David Andolfatto commented that either interest rates or the inflation rate are likely to act as what he describes as a "pressure release valve" in current conditions. He notes this has been his view over the past few years, sharing additional resources for further reading.

The tweet highlights an ongoing expectation that changes in interest rates or inflation will play a key role in future economic adjustments.

Andolfatto previously observed that the 10-year real interest rate returned to pre-financial crisis levels as long-term inflation expectations remained steady. He has also discussed past debates within the FOMC about state-contingent versus calendar-based policy. Both references highlight ongoing areas of focus for policymakers tracking interest rates and inflation.

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