How wage inflation became the Fed’s regressive red line

The period from 2021 to 2023 witnessed a significant surge in inflation, affecting consumer goods, housing, and assets. While wage inflation also increased, it did not keep pace with other inflation measures. As wages began to accelerate, the Federal Reserve (Fed) initiated rate hikes to cool the economy, adhering to its long-standing belief that wage inflation could lead to spiraling inflation and needed to be controlled.