Central Bankers Must Move Beyond ‘We Don’t Know’ on Rates

Three years into Covid and the upheaval it unleashed, the supreme beings of the economy are still in IDK mode. They need to regain some of their omnipotence. Not hubris, but that former sureness of touch is needed now more than ever. Unfortunately, it's proving elusive.

It was fine in 2020 to profess uncertainty about the path of the virus and the financial tumult it would produce. Central banks were supposed to have found their bearings by now. But instead of moving confidently toward a pause in interest-rate hikes they often sound and act like they are captive to events. Being responsive to dramatic developments is fine, but you also need to identify a strategy and stick to it. Too much thinking out loud can be unsettling and, at times, counter productive.