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This Inflation Scare Is Exactly What the Fed Was Hoping to Avoid

The clever monetary strategy enunciated last year only works if the public trusts the Fed to do the right thing.

It must be frustrating to make monetary policy at the Federal Reserve these days. Just before Labor Day last year the Fed proudly announced a new strategy that was mainly focused on preventing deflation—falling prices. Less than a year later it’s under fire for failing to prevent the opposite, inflation. On May 12 the Bureau of Labor Statistics announced that consumer prices had risen 4.2% in April from a year earlier, the most since 2008.

France’s Maginot Line lasted longer. To some critics, the Fed’s emphasis on combating deflation looks like a classic case of generals preparing to fight the last war.