Harvard Economist: Inflation ‘Not Getting Under Control’ ‘Not Even Sure’ Fed Can ‘Cool’ It Without Recession

On Thursday’s broadcast of CNN International’s “First Move,” Professor of Public Policy and Professor of Economics at Harvard University Ken Rogoff said that inflation in the United States is “just way too high. It’s not getting under control.” And predicted that the Federal Reserve will not do enough to stop inflation, but will cool it down because “they won’t want to have an epic recession. I’m not even sure they can pull that off.” Rogoff also argued that the Biden administration was “pouring buckets of fuel” onto “the inflation fire” with its “massive stimulus.”

Rogoff said, “I think, in the end, they are going to pull up short. It’s true that if they wanted to really just wring inflation out of the system, and here we’re talking especially about the United States, where the — particularly, the last year, year-and-a-half has just had too much stimulus too late. The inflation’s just way too high. It’s not getting under control. It would be nice to have it under control, but just how big a recession do you want to tolerate on top of so many other things? I suspect that they’ll end up, in two years, having raised interest rates to 3 or 3.5%. But the point is, it won’t have been enough to stop inflation. It’ll cool it off, but they won’t want to have an epic recession. I’m not even sure they can pull that off.”

He added that inflation will be around “3.5, 4%. And I think they’re going to — what they’re going to start saying is, well, we see it’s going to be down at 2% in another couple of years and we don’t want to rush. And they’ll just push things back. It’s a very difficult situation. Frankly, if China keeps throwing out problem after problem, it’s not easy to dig our way out of this.”

Rogoff concluded, “There is both a supply problem and a demand problem. Let’s understand that, when the Biden administration came in, no one knew what to do, I’m not saying we know what should have been done. It’s not clear. But, now we know they were pouring buckets of fuel on the fire, with these — the inflation fire with [this] massive stimulus. And that’s really the situation we’re in in the United States. And it just takes time to dig your way out.”

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