The most basic orthodox channel is the Euler equation - higher interest rates provide more incentive to save rather than spend, lowering aggregate demand. The savings rate over this period went from ~2.2% to ~5%, which represents about ~500b in aggregate spending now saved
Joe Weisenthal
Joe WeisenthalAug 30, 2025
What’s the best evidence that the Fed’s rate hikes played an important role in bringing down inflation from its peak?
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