Glenn Hubbard, the former top economic adviser to President George W. Bush, is worried the Federal Reserve is getting caught flat-footed by red-hot inflation.
“The Fed is clearly being too accommodative,” Hubbard, now a professor at Columbia Business School, told CNN on Wednesday.
Consumer prices surged by 6.2% in October from a year before, a significant acceleration from prior months and the biggest jump since November 1990.
Hubbard said headline inflation is “very high” and “even more concerning” is that core inflation, which strips out food and energy, is high as well. That metric rose in October by the most since 1991.
“The question is: When does that get into the public’s consciousness? I think it has already,” said Hubbard, who chaired the Bush administration’s Council of Economic Advisers.
And yet the Fed has only just begun to slow its stimulus program of asset purchases and has continued to keep interest rates at rock-bottom levels.
“It doesn’t add up,” Hubbard said of Fed policy. “You don’t have to pour gasoline on a fire.”
The criticism of the Fed, from a Republican economist no less, comes as President Joe Biden debates whether to reappoint Fed Chairman Jerome Powell, a Republican nominated by former President Donald Trump.
“I don’t think the house is on fire. There is time to make a course correction,” Hubbard said of the inflation situation. “But I’m not sure the Fed is going to make it.”