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When Is a Rate Hike Not Tighter Policy?


Now that the Fed has started to bump up the federal funds rate, the explanation often heard for it is that the Fed is “tightening” monetary policy to keep economic growth in check. But sometimes the Fed needs to move rates just to keep policy from changing.

Now that the Fed has started to bump up the federal funds rate, the explanation often heard for it is that the Fed is “tightening” monetary policy to keep economic growth in check. But sometimes the Fed needs to move rates just to keep policy from changing.


Suggested citation: Altig, David E., 2004. "When Is a Rate Hike Not Tighter Policy?" Federal Reserve Bank of Cleveland, Economic Commentary, 08.01.2004.

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