Former Fed vice chairman Alan Blinder claimed the full impact of March 2022 interest rate hikes on the economy has not yet been felt.

The Fed has lifted its target rate by 525 basis points to 5.25%-5.50% over 17 months.

Blinder believes core inflation reacts slower to monetary policy than headline inflation, suggesting the Fed should pause rates for some time.

The core rate is 4.2%, while the Personal Consumption Expenditures (PCE) price index is 3.3%, above the Fed’s 2% target. Blinder believes the Fed may struggle to lower inflation’s “last mile,” but won’t be “stubborn” if it rises past 2%.