Has the Federal Reserve Lost the Fight Against Inflation?
The central bank has been slow to tighten monetary policy, but the bond market seems to believe that it can still get consumers prices under control before it’s too late.
The Federal Reserve can still get a handle on inflation.
Photographer: Saul Loeb/AFP via Getty Images
Has the Federal Reserve lost control of inflation and, by extension, the economy? No doubt, consumers are feeling the pain, with inflation rates in the U.S. the highest since the early 1980s. But does this mark a secular change in the economy or something that may prove relatively fleeting? Bloomberg Radio’s Paul Sweeney and Matt Miller hosted a discussion on the issue with Bloomberg Opinion columnists Bill Dudley, the former president of the Federal Reserve Bank of New York, and Matthew Winker, editor-in-chief emeritus of Bloomberg News. This is an edited transcript of their conversation.
Paul Sweeney: A lot of investors are saying the Fed is behind the curve and will need to raise interest rates in increments of 50 basis points multiple times. What's your view, Bill?