Powell and the Fed Need to Get Back on Course
If they’d known what was coming last month, they wouldn’t have slowed the pace of monetary tightening.
Not bluffing.
Photographer: Samuel Corum/Bloomberg
Financial markets are coming around to the idea that the Federal Reserve means what it says about controlling inflation. In testimony to Congress this week, Fed Chair Jerome Powell said inflationary pressures had proved stronger than expected since the central bank raised rates by 25 basis points to a range of 4.5% to 4.75% last month. His hawkish comments left investors expecting a 50-point increase at the next policy meeting in two weeks’ time — and for the moment dispelled any doubts about the Fed’s determination to get inflation back to 2%.
That’s all to the good. The more the Fed is believed, the easier its job will be.