For this reason, it is complex for the Federal Reserve to decide between an increase of just 50bp, 75bp, or more.
However, the reality is that in hierarchical terms the fight against inflation is the first incentive that a central bank should have, even one like the Federal Reserve with a double mandate, that is, low inflation with economic growth.
In this duality, it will inevitably be more painful to live through a period of prolonged inflation than a recession caused by the application of monetary discipline. Why? Because money will never recover its value, however, the economy will pick up and improve its level.
In the current global situation, where shocks persist on the supply side that impact global prices, the probability of stagflation (inflation with low growth) is greater than that of a recession with low inflation. For this reason, the Federal Reserve must prioritize the fight against inflation, paying the cost of the recession, by the way, caused by themselves.
Recessions are the consequence of expansionary policies
In a monetary system like the current one, it is impossible to avoid recessions caused by quantitative easing, expansion of balance sheets, or excessive printing of money. Also, it is not possible to avoid monetary inflation.
Many economists, including central banks, have completely lost their way, thinking that inflation or recessions themselves are not caused by monetary expansion beyond what the economy allows.
Furthermore, most central banks no longer give importance to the quantity of money or some monetary aggregate in order to conduct a monetary policy that is more faithful to its essential reason, which is money. Instead, they deceive themselves and the public with new stratagems that take them further and further away from an accurate forecast of inflation, something that would help them fight it effectively.
Monetary policy has fallen into the prostitution of the markets, where the profits of the money reach the hands of the highest bidder. The central banks select to whom they will pass the profits from the monetary expansion, and eventually, they will opt for the markets or for the governments, not for the public, which will have to pay the monetary excesses through the incisive inflationary tax.