> If the fed loses appetite or ability to continue increasing interest rates
How does the Fed lose the ability to increase (or decrease) interest rates? I was under the impression that (ignoring the consequences of doing so), they can set them as they please.
The Board of Governors is appointed by the President, and Governors can be dismissed by the President. If your increase is summarily reversed by the apparatchik board that replaces you, can you still be said to be capable of raising rates?
The Fed chair is appointed by the President. He or she may decided it is better for their re-election to have rates go down and appoint someone who agrees, or they my pressure the Fed chair accordingly.
How does the Fed lose the ability to increase (or decrease) interest rates? I was under the impression that (ignoring the consequences of doing so), they can set them as they please.