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Inflation Poses a Growing Credibility Risk for Central Banks

While rising prices may no longer be considered transitory, public trust in these institutions soon may be.

U.S. Federal Reserve Chair Jerome Powell

U.S. Federal Reserve Chair Jerome Powell

Photographer: Al Drago/Bloomberg

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Initially, Jerome Powell said the highest inflation in decades was going to be “transitory.” This week, the world’s most powerful central banker said the nebulous term should be retired. Such is the high-stakes guessing game going on at the U.S. Federal Reserve and the world’s other central banks, which risk losing public confidence should inflation continue to prove less, well, transitory than expected.