The Fed should explain how it will respond to rising inflation
The Fed’s “average inflation targeting” regime remains too vague
THE INEVITABLE has begun. America’s consumer-price index (CPI) in March was 2.6% higher than a year earlier, when prices collapsed as the pandemic struck. The increase in inflation from 1.7% in February was the biggest rise since 2009, the last time the economy was recovering from a deep shock. Several more months of high numbers—by rich-world standards—are coming. The CPI could reach over 3.5% by May. On the separate price index used by the Federal Reserve, inflation will soon rise above the central bank’s 2% target.
This article appeared in the Leaders section of the print edition under the headline “Be prepared”
Leaders April 17th 2021
From the April 17th 2021 edition
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