They had to raise rates. If they hadn't, we'd have like 20%+ inflation right now.
Discussion
And they are going to have to lower them or the debt will go higher much faster.
They need GDP to grow faster than debt in order to avert a Malthusian event.
If debt/GDP gets too high then the cost of servicing your debt can accelerate faster than your ability to service it and ultimately outrun you.
This is how South American currencies collapse.
So the Fed actually needs high inflation in order to bring down debt/GDP ratio because GDP inflates with inflation, whereas debt does not.
They probably want 5-10% inflation, not so hot to trigger capital flight but hot enough to inflate away some debt.
Not sure they will touch rates. They will use esoteric tools now that they have the patient sedated and the thorax open.
They are always lagging what's really going on. Inflation was a product of supply chain issues. The balance was jacked after the pandemic shutdowns.
Squeezing too hard is slowing down the minuscule growth we already seeing. Choking off growth in this environment seems like a formula that will wreck the small guy, more than inflation will.