Debate: Galbraith vs. Furman on Inflation

In a commentary published on August 2, Jason Furman of Harvard University notes that, “Recent price- and wage-growth data make it increasingly clear that the US economy’s underlying inflation rate is at least 4% and more likely to be rising than falling.” And that, he argues, justifies a continuation of “rapid interest-rate hikes until there is clear evidence that underlying inflation is slowing dramatically.”

But James K. Galbraith of the University of Texas, Austin, disagrees that today’s wage-price inflation is as persistent as Furman suggests, or that interest-rate hikes are what the US economy needs right now.