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Serious questions about whether central banks could create inflation

It lower inflation from early 80s was the result of China and containers it was not because the central banks inflation targets. 

They missed their targets most om the time and they could not get inflation up to their 2 percent targets.

Can we now expect them to be able to get inflaion down from eight och nine percent?

The Fed and other central banks had been trying and failing to push inflation rates to 2%.


Jerome Powell’s Not for Turning—Yet

Even at 3.75%-4% the Fed’s base rate is negative in real terms.

No disinflation we can remember was achieved without rates rising above the inflation rate.

The Fed’s inflation target is 2% while personal-consumption expenditure inflation (the Fed’s favorite measure) was still 6.2% in September. 

The Fed will have to watch for signs of financial trouble of the kind that hit British pension funds, but it still has a lot of anti-inflation work to do.

Milton Friedman would have smiled at the Fed’s reference to “lags” in the impact of higher rates, but we doubt he would have called for a retreat this soon in the fight against the worst inflation in 40 years.

The Editorial Board WSJ 2 November 2022

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