The Fed has a dilemma, almost a race, between two things as they raise rates here.

1) Raising rates generally results in tighter borrowing standards on a lag. This can reduce lending-driven money creation and lead to disinflationary demand destruction around the margins.



2) At high public debt levels, raising rates also increases federal interest expense, which increases the fiscal deficit, which is a source of ongoing inflationary stimulus into the economy.



In the 1940s, inflation was fiscal-driven and public debt was high.

In the 1970s, inflation was mostly lending-driven and public debt was low.

Currently, the Fed is using a 1970s-style playbook to deal with 1940s-style fiscal-driven inflation.