The Fed might be in denial about the next recession

The central bank's normal toolkit hasn't been working — so now what?

Ben Bernanke and Jerome Powell.
(Image credit: Illustrated | fstockfoto/iStock, Alex Wong/Getty Images, Aerial3/iStock)

The Fed is stuck.

The economic models that have guided monetary policy in recent decades say low unemployment should lead to higher inflation. When that happens, the Fed should respond by hiking interest rates, a move that also readies the Fed to fight the next recession by cutting rates back down.

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Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.