The Fed Can Now Declare Victory Over Inflation
Higher prices aren’t over, but the central bank has officially completed its pandemic mission.
Sign of the times?
Photographer: M. Scott Brauer/Bloomberg via Getty Images
When it comes to inflation, America has reached a “Mission Accomplished” moment. Rule No. 1 of inflation reports is never to read too much into one report, but there have now been several months of fairly low inflation, so it seems safe to call it: The Fed did its job. Pandemic inflation is over.
Note that I do not say, “Inflation is over.” Between tariffs and lower immigration, higher inflation is likely. But even if the next inflation report shows a big uptick, this week’s is an important marker. It bolsters the Fed’s credibility, showing that it is capable of fulfilling its mandate — and it gives the Fed more policy options if inflation returns.