David Malpais, Treasury Undersecretary during Trump I’s first two years, has misunderstood what the Federal Reserve Bank must do. He undergirded his misunderstanding with this:

…the Fed’s demand-side model treats economic and job growth as inflation risks and prescribes higher interest rates.

Well, yeah. Economic growth in demand, without a parallel growth in economic supply is inflationary, and job growth increases business’ costs and so applies upward pressure on prices businesses must charge.

The correct answer for the Fed, given its dual mandate of price stability and full employment, is not just to stop reducing its benchmark interest rates—they’re too low already—but to raise them a quarter point to the level (4.75%-5%) historically consistent with its price stability goal of 2% inflation. Then the Fed should sit down and let the market fluctuate interest rates and let the inflation rate bounce around those 2%. A free market, in an environment of reduced regulatory constraints (over-regulation being one of President Donald Trump’s (R) bugaboos) will easily correct on its own, both those market interest rates and that inflation rate. That will allow the market to flourish, and that, in turn, will produce full employment.

Artificially suppressing interest rates is far more inflationary than are stable rates in the 4.75%-5% range. Lowering the cost of money artificially, rather than letting market forces deal with that, only stimulates demand without stimulating production (which by the nature of the two, strongly lags changes in demand), and that’s directly inflationary; it’s the textbook basic cause of inflation.