In the past six months, the U.S. economy has displayed signs of weakness that have worried many economists. In the last quarter of 2015, GDP growth was just 1 percent. Other indicators such as industrial production, the stock market and expected inflation experienced bouts of outright contractions in 2015. Some economists are even predicting that we are on the verge of a recession.

Analysts blame a number of things for this economic turbulence, including low oil prices, weak growth abroad and a stronger dollar. But if you look at the effects of U.S. monetary policy around the world — and their repercussions in America — it becomes clear that the ultimate culprit for these economic headwinds lies at home. Through both its policy actions and its written words, the Federal Reserve has mistakenly tightened monetary policy in fear of rising inflation. That mistake has not just hurt the U.S. economy, it is reverberating around the globe.

This week, the Fed has an opportunity to admit its error when the Federal Open Markets Committee meets to set monetary policy. It’s critical that Fed board members understand how their actions are hurting economies around the world, which has a corresponding negative effect on the U.S. Otherwise, the Fed will continue to tighten policy — and the economic recovery will continue to sputter.

The Fed began tightening policy in 2014 when, despite a slow start, the U.S. economy made significant advances with some observers believing an economic boom was under way. This improved economic outlook and the need for Janet Yellen’s Fed to prove its inflation-fighting credibility led U.S. monetary officials to start talking up future interest rate hikes.

This signaling from the Fed that monetary policy would tighten intensified in 2015. As a consequence, investors expected U.S. interest rates to rise. About the same time, the central banks of Europe and Japan were indicating they would keep interest rates low. This divergence increased the demand for short-term investments in the United States as interest rates there were now expected to be comparatively higher. As more funds flowed into the United States, demand for U.S dollars rose and caused the currency to appreciate over 20 percent from mid-2014 to late-2015, one of the sharpest rises in decades.

By talking about future interest rate hike, the Fed was indicating that tighter monetary conditions would exist in the future. That, in turn, worsened the economic outlook and caused companies to cut back on their spending plans. The Fed’s talking up of interest rate hikes, therefore, amounted to an effective tightening of monetary policy long before the actual raising of interest rates in December 2015. It affected not only the U.S. economy but also the many emerging economies whose currencies are pegged to the dollar, colloquially known as the “dollar bloc countries.”

For the United States it meant monetary policy was tightening well before the economy had reached full employment. Though the unemployment rate had fallen to about 6 percent by mid-2014, other measures such as the employment-to-population rate for prime-age workers indicated there was still much slack in the economy during this time. The Fed, in other words, was getting ahead of the U.S. recovery with its rate hike talk. And that’s why a number of U.S. economic indicators like stocks, industrial production, capital expenditures and expected inflation all started trending down in 2015.

The Fed’s tightening of monetary conditions were also poorly timed for the rest of the dollar bloc countries, especially China. The Chinese economy was already slowing down as it attempted a difficult transition from the high growth of a developing economy to the more modest growth of a middle-income country. In addition, China’s debt-to-GDP ratio had grown from around 150 percent in 2008 to about 250 percent today, making it more vulnerable to economic shocks. Between a natural slowdown and an increased susceptibility to shocks, the Chinese economy was not ready for the Fed's tightening of monetary policy.

But that is exactly what it got. The dollar’s 20 percent-plus rise meant a significant appreciation of China’s currency, the renminbi, and a tightening of Chinese monetary conditions. Chinese officials tried to offset this tightening by lowering interest rates. This easing plus the economic slowdown coming from its transition to middle-income country have been putting downward pressure on the Renminbi’s value. The strong dollar, however, has kept it artificially propped up.

Understanding the renminbi is artificially higher, many investors fear that a major devaluation of 10 percent or more is inevitable. Unsurprisingly, they want to get their funds out of China before the renminbi loses value. Chinese monetary authorities, on the other hand, want to maintain the peg because they fear the fallout from a major currency devaluation. Consequently, they have defended the Renminbi’s elevated value during this time by paying out almost $700 billion of the country’s foreign reserves to the investors rushing to get out of China.

The Fed’s tightening that began in mid-2014, then, was the catalyst behind this mass exodus of capital from China and can explain why China’s problems erupted when they did.

The Fed’s tightening can also explain why China’s economy has become such a tinder box. The Fed’s actions have pushed China into an untenable position. Chinese monetary authorities must burn through their foreign reserves to defend the overvalued Renminbi. However, at some point the reserves will run out and China will be forced to devalue. Chinese officials can try to delay this day of reckoning by restricting capital outflows. But for a country that big with corruption problems, capital controls will not work and may serve only to increase uncertainty. The fear of capital controls only incentivizes investors to move their capital out the country, further weakening the renminbi and making financial markets even more unstable.

The Fed could reverse these dire developments by cutting interest rates or implementing more quantitative easing if needed. This would ease monetary conditions throughout the dollar bloc countries. Instead the Fed continues to signal a desire to raise interest rates in 2016, as seen in Fed Chair Janet Yellen’s testimony to Congress in February.

So why is the Fed unwilling to act? The answer is the Fed’s continued belief in the Phillips Curve, the idea that inflation and slack in the labor market move in the opposite direction. Consequently, the Fed sees the ongoing decline in the U.S. unemployment rate as indicating a rise in inflation is just around the corner. They do not want to be caught off guard with inflation and therefore are unwilling to ease.

These fears are misplaced. As former top International Monetary Fund economist Olivier Blanchard recently noted, the relationship between inflation and labor market slack is not constant. It is not worth fiddling with such an unreliable instrument when the stakes so high. Though the Fed’s preferred inflation measure, the core PCE deflator, has recently inched up to 1.7 percent, it is still well below the Fed’s 2 percent target and not far from its 1.5 percent average over the past seven years. If anything, then, the Fed has erred by keeping inflation below its target.

The Fed is a monetary superpower, affecting monetary conditions across the globe. It needs to better recognize this role and act now with decisive easing. Otherwise, it risks cutting off the economic recovery before most Americans even begin to feel it.

David Beckworth is a former U.S. Treasury economist, visiting scholar at the Mercatus Center and an associate professor of economics at Western Kentucky University.

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