ain ▁its ▁former ▁level . ▁ ▁U . S . ▁financial ▁response ▁The ▁U . S . ▁Federal ▁Reserve ' s ▁mon et ary ▁tight ening ▁in ▁ 1 9 8 8 ▁target ed ▁the ▁rapid ▁infl ation ▁of ▁the ▁ 1 9 8 0 s . ▁By ▁raising ▁interest ▁rates ▁and ▁lower ing ▁growth ▁expect ations , ▁the ▁Fed ▁hoped ▁to ▁slow ▁and ▁eventually ▁reduce ▁infl ation ary ▁press ures , ▁creating ▁greater ▁price ▁stability . ▁The ▁August ▁ 6 ▁invasion ▁was ▁seen ▁as ▁a ▁direct ▁threat ▁to ▁the ▁price ▁stability ▁the ▁Fed ▁sought . ▁In ▁fact , ▁the ▁Council ▁of ▁Econom ic ▁Ad vis ors ▁published ▁a ▁cons ensus ▁estimate ▁that ▁a ▁one - year , ▁ 5 0 ▁percent ▁increase ▁in ▁the ▁price ▁of ▁oil ▁could ▁tempor arily ▁raise ▁the ▁price ▁level ▁of ▁the ▁economy ▁by ▁one ▁percent ▁and ▁potentially ▁lower ▁real ▁output ▁by ▁the ▁same ▁amount . ▁ ▁Despite ▁the ▁potential ▁for ▁infl ation , ▁the ▁U . S . ▁Fed ▁and ▁central ▁banks ▁around ▁the ▁glo be ▁decided ▁it ▁would ▁not ▁be ▁necessary ▁to ▁raise ▁interest ▁rates ▁to ▁counter act ▁the ▁rise ▁in ▁oil ▁prices . ▁R ather , ▁the ▁U . S . ▁Federal ▁Reserve ▁decided ▁to ▁maintain ▁interest ▁rates ▁as ▁if ▁the ▁oil ▁price ▁sp ike ▁were ▁not ▁occurr ing . ▁This ▁decision ▁to ▁ref rain ▁from ▁action ▁stem med ▁from ▁confidence ▁in ▁the ▁future ▁success ▁of ▁Des ert ▁Storm ▁to ▁protect ▁major ▁oil - produ cing ▁facilities ▁in ▁the ▁Middle ▁East ▁and ▁a ▁will ▁to