Don’t Confuse Powell’s Tough Talk With Massive Rate Hikes
The path to less gargantuan moves was laid outside the US. The Fed chair may even be a laggard.
Are we getting any closer to the peak?
Photographer: Olivier Chassignole/AFP/Getty Images
It’s way too soon to look for a shift by central banks toward easier money. That point has been made loud and clear. Don’t let that obscure an important development: While officials aren’t done combating inflation, they do want to set aside the most intense phase of that tussle.
Looking for a flip to undisguised dovishness will be a futile exercise until well into next year. That’s no excuse for dismissing the evolution we’re seeing in policy settings. There’s a growing recognition that the breakneck pace of interest-rate hikes that characterized much of this year needs to transition into something less frenetic. Taking longer to reach the endgame, in less ambitious leaps, is better than strangling the global economy and then figuring out what to do with the body. The opportunities — and challenges — entailed in this recalibration aren’t unique to the Federal Reserve.