Half way through her term as Fed chair, Janet Yellen presided over the Fed’s controversial decision to start raising interest rates—a decision many viewed then, and many more view now, as premature. Was that decision consistent with Yellen’s supposed commitment to full employment? Or was she instead a hawk in dove’s clothing, whose monetary over-tightening kept millions out of work for no good reason? I argue that neither view is correct. Instead, the roots of the Fed’s untimely rate hike, and Yellen’s part in it, lay in her and other Fed officials’ ill-conceived plans for “normalizing” monetary policy.
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