Although lowering inflation will bring some pain, a failure to restore price stability would make it much harder and much more painful to restore it in the future. When I first joined the FOMC, our policy rate was still below 1 percent. In the three meetings since, we have moved expeditiously by raising rates 75 basis points at every meeting.
We must protect the purchasing power of the people. Much as we would have liked to avoid it, we seem to have very little option than to raise the Cash Reserve Ratio requirement. Let us remind ourselves that this tool is being resorted to by several central banks around the world in their own fight against inflation, often in conjunction with steep rate hikes.