Omicron May Be Uncertain, But Inflation Is a Sure Thing
Officials can’t wait for a moment of clarity in the pandemic to tackle rising prices. Those that acted on the data are now ahead of the Fed.
Now about that “T” word.
Photographer: Alex Wong/Getty Images North AmericaWhat once looked overzealous now appears prudent. Central banks that moved early to pare back stimulus and hike interest rates may have made the right call after all. While we wait for scientists and medical authorities to gauge how big a risk Covid-19’s omicron variant poses to public health, inflation is a sure thing. The global recovery hasn’t lost significant momentum — yet.
Policy makers need to respond to what's in front of them. Sure, they could wait. And wait. But the pandemic never offered simple choices. This helps explain why Federal Reserve Chair Jerome Powell’s remarks Tuesday that the central bank may speed up its taper of asset purchases came as such a shock. After months of trying to convince markets that this bout of high inflation would pass, he gave up on the word “transitory” altogether. There may not be clarity on omicron, but there is now conviction — arguably for the first time in decades — that inflation needs to be tackled.