The Federal Reserve increases interest rates primarily to control inflation
Empirical evidence and central banking policy analyses strongly support the conclusion that the Federal Reserve adjusts interest rates primarily to manage and control inflation.
The retrieved literature, particularly studies evaluating recent Federal Reserve actions and monetary policy determinants like papers [7] and [8], confirms that controlling inflation is a principal driver and objective behind Federal Reserve interest rate hikes. No papers refute this fundamental monetary policy principle.
Mengqi Wang. Exploration of the Reasons for the Federal Reserve’s Interest Rate Hike in 2022 and Evaluation of Policy Effectiveness. 2024. https://doi.org/10.61173/fvxyrk61
Paper 7 discusses how rapidly rising inflation prompted the Federal Reserve to implement interest rate hikes in 2022 to successfully reduce the inflation rate.
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Tianqi Qiu. Predicting the Federal Funds Rate: A Linear Regression Analysis. 2023. https://doi.org/10.54254/2754-1169/20/20230172
Paper 8 identifies inflation as a crucial macroeconomic variable and core driver when constructing predictive models for the federal funds rate.
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