Federal Reserve’s Dilemma Is a Nice Problem to Have
For most of last year, “immaculate disinflation” looked unlikely. So far, so good.
Could you do better?
Photographer: Win McNamee/Getty Images
The latest economic data for the US are better than most dared hope a year ago. Inflation has fallen much faster than the Federal Reserve expected, and so far without the abrupt economic slowdown and higher unemployment that many economists thought likely. With prices coming back under control, investors are confident that the next move in interest rates will be down. The only questions are when and how much.
Caution would be wise. A hoped-for soft landing is increasingly plausible, but this won’t make the Fed’s job any easier. At their meeting this week, the central bank’s policymakers need to weigh risks and uncertainties that could still upend expectations.