Fed risks damaging credibility by avoiding a hike, Dario Perkins warns

Fed risks damaging credibility by avoiding a hike, Dario Perkins warns
Fed credibility depends on rate hike move

Dario Perkins raises concerns about the position of a current Federal Reserve official, Warsh, regarding interest rate hikes in response to energy prices and recent public statements. Perkins notes that Warsh has openly discussed his views and has shown criticism of Chair Jerome Powell, focusing on revealed preferences.

He cautions that if Warsh decides not to push for a rate increase, it could seriously undermine his personal credibility.

Perkins has previously raised questions about how markets and the Fed react to small, month-over-month inflation changes in his article "Minor inflation differences prompt strong Fed responses". He has also examined disagreements among experts on the intelligence of the bond market in "Differing views on bond market intelligence debated by experts". These earlier observations provide context for his scrutiny of Fed policy signals.

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