Overcorrection is a well-documented behavioral risk: respond to one mistake with excessive force in the other direction and you create a second, often larger error.
In 2021, Federal Reserve officials misread the inflation signal. Their models said supply disruptions would resolve and prices would fall on their own. They were wrong, and the costs were real. The lesson the institution drew: do not misread inflation again. And that lesson, when it hardens into reflex, is how the next mistake gets made.
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