Asset Inflation Jumps and Fed Policy Makers Are Hamstrung

The Federal Reserve’s focus on consumer-price inflation, over which it exerts relatively little influence, means it’s ignoring asset prices that are veering dangerously close to bubble territory. The surge in prices this year for virtual currencies such as bitcoin is reminiscent of the technology-stock excess of the late 1990s, and even after a recent selloff, the biggest U.S. tech shares are still up more than 20 percent. Policy makers could rein in the speculation by speeding up the pace of interest-rate increases, but their inflation mandate makes higher borrowing costs harder to justify given that increases remain subdued.