As a series of “event studies”, noting just when the Fed began prior tightening cycles is quite illustrative.
They started to tighten when CPI was at 5%, rather than at or 2% (you can see why inflation undershot for years, given they’d tighten when CPI hit 2%, which became more of a “ceiling” than a floor).
But this time, they’ve tightened when unemployment was at 3.6%, rather than 4.5% or more. This does suggest that the NAIRU (non-accelerating rate of unemployment) has fallen over time and is probably closer to 4%.
Anyway, the above shows “this time” really was different in so far as policy went. And now they fear they are too far behind.
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