Athanasios Orphanides

Professor of the practice Athanasios Orphanides said the post-pandemic period had exposed the cost of misreading inflation. "If we look at the post-pandemic experience, many central banks around the world did not calibrate policy correctly and ended up with inflation that was significantly higher than the definitions of price stability that they were aiming for," he said.

"The foundation for prosperity in our economy is monetary stability," said professor of the practice Athanasios Orphanides. "An environment of high and volatile inflation harms stability. Even when this means making decisions that may be unpopular in the short run or perhaps harm some special interest and the electoral considerations of some politicians, we need an independent institution to make sure that decisions will be the best for society over the long run."

Professor of the practice Athanasios Orphanides said that in a democracy, it's important that institutions like the Fed are responsive to society's preferences. "The challenge is that politics can sometimes distort decisions. Things that we wish were taken care of don't get done because they might compromise short-term electoral considerations. This is why it is desirable to delegate some decisions to independent institutions protected from shortsighted political influence. This is where central bank independence comes in," he said.

Before being tapped for Fed chair, Kevin M. Warsh characterized the A.I. boom as "the most productivity-enhancing wave of our lifetimes — past, present and future." Professor of the practice Athanasios Orphanides noted: "I don't think we are anywhere close yet to having evidence that A.I. has increased potential output significantly. That's why it's tricky to use this argument to say this clearly justifies lower rates today."