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In an interview with Bloomberg on Friday, Harvard University Professor of the Practice of Economic Policy, who served as Chairman of President Barack Obama’s Council of Economic Advisers, stated that inflation “has been trending sideways” and that the Federal Reserve “is far away from where it’s supposed to be on inflation and not getting any closer.” Furman also noted that if the government tightened fiscal policy, “that would certainly assist with inflation” as long as it did not harm the most vulnerable people.

“Inflation has gotten really stubborn,” Furman said. “It’s been moving in the wrong direction. There used to be considerable fog, with various metrics revealing different information. But now, the price and wage numbers are all expressing the same story. And they are telling us that the Fed is far from where it’s supposed to be in terms of inflation and isn’t coming any closer.”

“Is there space, is there, I guess, a place for fiscal policy in this situation right now?” co-host Romaine Bostick then questioned.

“Look, if we conducted a fiscal contraction, that would certainly assist with inflation,” Furman responded. “I can see an argument for that. I’d only support it if you were also safeguarding some of the most vulnerable people. If you did it and then punished them, it would exacerbate their issues. However, the Fed is in charge of the inflation mandate. They are the ones in charge, they are the ones with the major tool, and they’re the ones who have to stick with it until it’s finished.”

Later, Furman stated that President Joe Biden “has an appropriate strategy” on the debt ceiling and that “at some point, obviously, he will have to negotiate regarding discretionary spending levels. That’s great if Republicans want to say it was in return for raising the debt ceiling and the White House wants to pretend it wasn’t. But it can’t be the severe ransom hostage-taking crisis we’re witnessing right now. So, I believe he is handling it roughly correctly.”

Author: Steven Sinclaire

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