Powell and his peers are digging out their mandates to justify tougher measures to quell inflation.
In the pre-pandemic era, they were roundly castigated for consistently failing to hit their inflation targets. More recently, they’re under fire for not anticipating the sharp acceleration in inflation since early 2021.
Analysts point out that if the market fully believed the Fed was determined to break the back of inflation, the US share market would have fallen by at least 20 per cent this year.P 500 has climbed almost 11 per cent since its June lows. In this context, it’s hardly surprising that many leading central bankers used the latest Jackson Hole symposium to emphasise that they had returned to basics, and were now solely focused on fulfilling their price-stability mandates.
She noted that if a central bank “underestimates the persistence of inflation – as most of us have done over the past one and a half years – and if it is slow to adopt its policies as a result, the costs may be substantial.”
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