Although the Bank of Canada and the Fed have both chosen to stop increasing interest rates, they did so for very different reasons. When the Bank of Canada called a halt to interest rate increases last month, it did so because it thought it had hit the sweet spot - inflation on target, output at capacity, and a level of interest rates consistent with staying there.
The Fed isn't in the sweet spot, and with today's pause, it has decided that it can't get there on its own. Inflation is higher than the Fed would like, but it's decided to temporarily outsource reducing inflation to the anticipated slowdown. That may be a good decision for now (I personally was on the rate-hike side, thanks for asking) but it sets up an even harder problem for future decisions. Figuring out when the Fed's problem stops being one of dealing with a recession and goes back to being one of containing inflation will be a tricky business indeed.
In retrospect, the Fed appears to have set interest rates too low, for too long during 2002-2004. This Economist cartoon from last January is starting to look to be as good an assessment of the situation as any.
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