Global Central Bank PolicyMonetary Policy

Inflation hits 7%; Fed abandons 'transitory' language

_Economics/__Global Finance

Summary

With US inflation hitting 7% — the highest since 1982 — Fed Chair Powell acknowledged in December that 'transitory' was no longer the right word. The Fed began accelerating its taper of asset purchases, signalling rate rises were coming. The damage of a year's delay was now clear.

Powell's congressional testimony, the inflation data, and what accelerating the taper implies for rate timing.

Assessment of the Fed's analytical failure and what a year earlier intervention would have achieved.

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