We don’t have many examples of last year’s big inflation (9%) but from that small sample we know that sometimes inflation goes away and then comes back even stronger.
Such big inflation has never gone away and stayed away unless and until three conditions have been met. They occur chronologically
1.) Fed Funds rate > current CPI &
2.) Fed funds rate > the recent high point of CPI &
3.) Fed Funds rate can rise or fall but stays > current CPI for several months
Statements from Fed Chair Powell, statements from other FOMC members, and the Fed’s “dot plot” indicate they are unanimous in the opinion that they can skip condition #2.
Their strategy can be expressed
1.) Fed Funds rate > current CPI &
2.) Fed Funds rate can rise or fall but stays > current CPI for several months.
I am skeptical.
The current Fed has made, and honorably-admitted to having made, several mistakes in the past. They have not however pointed out the fact that every one of those errors was on the same side. Every one of those errors was on the Keynesian side, the side of doing “too little” to fight inflation.
(Even) NYTimes Keynesian economist, Paul Krugman, notes that the FOMC is an echo-chamber of sorts with no dissenting (conservative) voices.
