Analysis points out a paradox in the Federal Reserve's policy: tightening credit for the private sector while remaining tolerant of expanding government deficits.
Wallstreetcn.com analysis points out that the Federal Reserve has failed to achieve its dual mandate over the past five years, with inflation consistently deviating from the 2% target, and small and medium-sized enterprises, the main engine of employment growth, being systematically suppressed under policy pressure. The article argues that the Federal Reserve's policy framework attributes the causes of inflation to private sector overheating rather than fiscal expansion, leading it to punish private sector borrowers through interest rate hikes, while providing implicit financing support for government debt through quantitative easing and a massive balance sheet. For example, by the end of 2025, the year-over-year PCE headline inflation rate rose to 2.9%, and the core PCE inflation rate reached 3.0%, yet the Federal Reserve announced in October 2025 that it would suspend quantitative tightening starting December 1. This led to the average interest rate for small business short-term loans rising to 8.4% in December 2025, with only 25% of owners engaging in regular borrowing, a historical low.
Source:华尔街见闻 · Source Link
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