Bloomberg Surveillance · Thursday, August 13, 2026
Lydia Mashburn stated that the Fed's primary role should be to restore credibility for price stability, emphasizing that lower interest rates do not sufficiently help the average wage earner facing rising costs. She expressed concern that the Fed might be changing metrics to fit its two percent inflation target rather than implementing policies that directly reduce demand-side pressures. Mashburn suggested that the Fed is currently in the 'too loose' category and a modest rate hike could be beneficial.
“The best thing the FED can do for both the labor market and for inflation is to restore his credibility for price stability. This is something worsh has promised that he will do, although I think his last press conference it felt like he was maybe being a little bit wishy washy about how the FED or when the FED would actually get to restoring that two percent inflation target and get that credibility back.”
“But we've been playing a lot of gay games. As Mike was just pointing out, the PCE is the target, that is the fed's official target, and we've been spending a lot of time parsing the data, trying to pull out the energy shocks, trying to look at core or super core, and it's more like we're changing metrics in order to fit the FED into two percent, and when really the FED ought to be doing things that really reduce things on the demand side of the economy, where we really are still seeing an over a bit of a at least too much easing, too much accommodation, maybe not a full overheating.”
“I think the FED could also maybe start talking about maybe returning to a slow roll off of its balance sheet. It doesn't only have an interest rate tool, as Worsh himself pointed out, But I don't think they should be afraid of a twenty five basis point hike. If not in September, then October. We are The Aier's Monitor and Neutrality report really shows that the FED is definitely in the two loose category.”