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El-Erian: The Cost of The Fed's Challenged Credibility

via Project Syndicate

SNIP
"Now that the Fed finds itself in such an uncomfortable situation – one mostly of its own making – it may be inclined to eschew further rate hikes, particularly given the growing criticism that it is tipping the economy into recession, destroying wealth, and fueling instability. Yet such a course of action would risk repeating the monetary-policy mistake of the 1970s, saddling America and the world with an even longer period of stagflationary trends.

Instead, the Fed should be doing much more to contain the adverse spillovers of its policy mistake, including through innovative thinking about its monetary-policy framework and more proactive collaboration with other policymaking entities (domestic and abroad).

Sadly, it is too late to avoid all the detrimental economic and social consequences of the damage the Fed has caused to its own credibility. The central bank was notably late with its response to inflation. But it is not too late to contain the harm. Doing so is crucial."

https://www.zerohedge.com/markets/el-erian-cost-feds-challenged-credibility