Fed May Need to Increase Rates Even with Elevated Unemployment

Federal Reserve Bank of Richmond President Jeffrey Lacker believes that the Fed may need to tighten monetary policy, even with unemployment levels as high as they are. He fears high inflation rates similar to those in the 1970s. In the late 1960s, the Fed fought high unemployment rates with looser monetary policy. The result was inflation rates in the 1970s topping at 14%. Lacker doesn't see deflation as a major risk and suggests that the Fed may do more harm than help by keeping interest rates so low.