Monetary policy cannot cure a supply shock — it can only spread its pain.
With war-driven energy costs setting the inflation path, Fed officials now concede that rate hikes work only by pushing employment below target and freezing rate-sensitive housing — sectors and households that are not the shock's source.
The same conclusion keeps arriving from across the workspace's research — 1 topics independently instantiate this theme. Filter the evidence by where it came from:
Housing is collapsing under supply-side labor, materials, and war-driven borrowing costs the hikes cannot address, making rate-sensitive sectors the designated shock absorbers of the anti-inflation campaign.
Fed presidents publicly concede the fight against a supply shock works only by pushing employment below target — tightening spreads the pain rather than curing its source.