The Federal Reserve Needs to Get a Lot More Hawkish

I have news for those who think the U.S. Federal Reserve has turned more hawkish on inflation: It has only just begun.

True, the minutes from the Fed’s December policy-making meeting display growing concern. Officials are acknowledging that the labor market is already very tight, and that factors such as wage growth probably won’t be entirely transitory. They seem to be losing hope that more people will come off the sidelines to satisfy demand for workers. They’re looking increasingly likely to raise interest rates immediately after the Fed’s asset-purchase program ends in March — though there’s still the wildcard of how a resurgent pandemic will affect the economy.