(CNN) — When the US Federal Reserve embarked on an aggressive campaign to quash inflation last year, it did so with the goal of avoiding a painful repeat of the 1970s, when inflation spun out of control and economic malaise set in.

Inflation has been sliding, indicating that after 10 consecutive interest rate hikes, the central bank is experiencing some success.

But Gary Richardson, a Federal Reserve historian, is worried policymakers — now contemplating taking a breather — still risk repeating mistakes from that era.

“The more times you pause , the longer the problem is going to go on,” he told me. “That’s a worry here.”

What’s happening: When the Fed met last week, it raised its key interest rate by another quarter of a percentage point, noting that inflation remains “well above” its longer-term goal of 2%.

Yet amid signs of stress in the banking sector that could pile pressure on the economy, it opened the door to keeping rates unchanged when it meets again in June.

“There’s a sense that we’re much closer to the end of this than to the beginning,” Chair Jerome Powell said.

Investors are cheering the notion that borrowing costs may have peaked. Richardson, however, is concerned inflation could surge again should that be the case.

A premature retreat could cause the Fed to lose its handle on the situation, presenting even grimmer options down the road. That’s what happened in the 1970s, he said.

Quick rewind: The chair of the Federal Reserve at the time, Arthur Burns, hiked interest rates dramatically between 1972 and 1974. Then, as the economy contracted, he changed course and started cutting rates.

Inflation later roared back, forcing the hand of Paul Volcker, who took over at the Fed in 1979, Richardson said. Volcker brought double-digit inflation to heel — but only by raising borrowing costs high enough to trigger back-to-back recessions in the early 1980s that at one point pushed unemployment above 10%.

“If they don’t stop inflation now, the historical analogy it’s not going to stop, and it’s going to get worse,” said Richardson, an economics professor at University of California, Irvine.

There’s some recent academic debate about whether it’s an oversimplification to cast Burns as foolish and Volcker as a hero. And the US economy looks a lot different now than it did 50 years ago.

But the comparisons reveal the high stakes for the Federal Reserve at a moment of acute uncertainty.

On the radar: The central bank’s aim of taming inflation without causing undue strain is made harder by the fact that the economy continues to produce mixed signals.

Data released Friday showed that US employers added 253,000 jobs in April — a surprise increase at a time when many indicators had been pointing to a slowdown in hiring. That bolsters the case for the Fed to keep hiking, despite hopes to the contrary on Wall Street.

“The strength of the April jobs data on Friday raised risks that future Fed policy will disappoint investors,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note to clients.

Debt ceiling fears grow ahead of crucial talks

Senior US Treasury officials are warning of dire consequences if an agreement is not reached soon to raise the country’s debt ceiling.

“It’s appropriate to have negotiations about the budget, about spending priorities,” Treasury Secretary Janet Yellen said Sunday on ABC’s “This Week.” “But we do need to raise the debt ceiling to avoid economic calamity.”

Coming up: President Joe Biden will hold a much-anticipated meeting with Congressional leaders, including Republican House Speaker Kevin McCarthy, on Tuesday. Yellen has said that unless the debt ceiling is increased, the US won’t be able to pay its bills by early June.

Wally Adeyemo, the deputy Treasury secretary, said Sunday that the uncertainty is already hurting the economic outlook, making it harder for businesses to plan for the future.

“We’re already going to start seeing the impacts on the economy of the fact that Congress hasn’t taken off the table,” he said.

Watch this space: There has been speculation that Biden could find a constitutional work-around if a divided Congress can’t come to terms. But Yellen said there are “no good options” other than a deal.

“I don’t want to consider emergency options,” she said. “What’s important is the members of Congress recognize what their responsibility is.”

More huge swings for regional bank stocks

The KBW Regional Banking Index, which tracks mid-size lenders in the United States, plunged 8% last week, its worst showing since the failure of Silicon Valley Bank in March. Yet this week is kicking off on a more optimistic note.

The latest: Shares of PacWest rose 39% in premarket trading on Monday, extending a substantial rally on Friday. The California-based lender said it would slash dividend payments, allowing it to conserve cash.

“Given current economic uncertainty, recent volatility in the banking sector and potential changes in regulatory capital requirements, we view reducing the dividend as a prudent step,” CEO Paul Taylor said in a statement Friday. “Our business remains fundamentally sound.”

Shares of other regional banks, including Zions and Comerica, are also up in premarket trading Monday. But given the ongoing volatility, it’s too soon to say the crisis of confidence in the sector has ended.

Remember: The failure of First Republic Bank last week has put investors on edge. JPMorgan Chase bought most of the bank’s assets, protecting depositors, but shareholders were wiped out. That’s sparked a hunt for any other lenders that may be vulnerable.

The Fed could be on the verge of repeating its 1970s mistake, Fed historian says