During an interview with Bloomberg on Friday, Professor of the Practice of Economic Policy at Harvard University and the Harvard Kennedy School Jason Furman, who served as Chairman of the Council of Economic Advisers under President Barack Obama and on the Council of Economic Advisers and the National Economic Council under President Bill Clinton, stated that inflation “has been moving sideways” and the Federal Reserve “is very far from where it needs to be on inflation and not getting closer.” Furman also stated that if the government contracted its fiscal policy, “that would certainly help with inflation” as long as it doesn’t hurt the most vulnerable.
Furman stated, [relevant remarks begin around 5:45] “Inflation has been really stubborn. It has been moving sideways. There used to be some fog with different measures showing different things. But now, the price numbers, the wage numbers, they’re all telling the same story. And they’re telling a story that the Fed is very far from where it needs to be on inflation and not getting closer.”
Co-host Romaine Bostick then asked, “Is there room, is there, I guess, a role for fiscal policy in this right now?”
Furman answered, “Look, if we did a fiscal contraction, that would certainly help with inflation. I could see an argument for that. I’d only do it if you were protecting some of the most vulnerable at the same time. If you did it and punished them, that would compound their problems. But [the] inflation mandate is assigned to the Fed. They’re the people responsible, they’re the ones who have the main tool that is used, and they’re the ones who are going to need to stay at it until it’s done.”
Later, Furman said that President Joe Biden “has the right strategy” on the debt ceiling, and “at some point, of course, he is going to need to negotiate over discretionary spending levels. If Republicans want to say that was in exchange for the debt limit and the White House wants to say it wasn’t, that’s just fine. But it can’t be sort of an extreme ransom hostage-taking type situation that we’re seeing now. So, I think he’s handling that roughly right.”
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