Although it denies it, it is the wakening of inflation that is sharper, if not more lasting, than expected that is forcing the Federal Reserve's hand.
The rise in prices, measured by the personal consumption expenditure index (the Fed's preferred instrument), in fact reached 4.4% over twelve months, its highest level since January 1991. This is more than double the l long-term goal of the Fed.
Other measures such as the consumer price index put inflation at 5.4% for a year.
Read also
Struggle for influence over the fate of Fed boss Jerome Powell
After arguing that inflation would be "transient," when the damage to the labor market caused by the pandemic was deep enough to maintain a deliberately lax monetary policy, Jay Powell and his colleagues face the facts.
It is time to begin the dismantling of a mode of intervention which since March 2020, the date of the start of containment, has allowed them to artificially maintain abnormally low long-term rates.
The time is over
This article is for subscribers only.
You have 78% left to discover.
To cultivate your freedom is to cultivate your curiosity.
Continue reading your article for € 1 the first month
I ENJOY IT
Already subscribed?
Log in
/cloudfront-eu-central-1.images.arcpublishing.com/prisa/ZJX5JOMXDVHK7OBWOK4ONTCXVA.jpg)
