The Fed's Inflation Blind Spot The Bank of America's warning that the Federal Reserve is deviating from a fundamental rule for fighting inflation has sent shockwaves through financial markets.
However, this development raises concerns not just among investors but also about the Fed's understanding of underlying economic forces.
One of the most basic principles in economics is the Taylor rule, which dictates that when inflation exceeds a target rate, interest rates should be higher to counteract it.