Monetary policy can’t tame inflation
Inflation is like that “boor” who barges into “the hottest restaurant in town without a reservation,” says Michael Sesit in Bloomberg. You can accommodate it, hope it’ll leave, or have the bouncer kick it out. The U.S. Fed is hoping this “unwelcome customer” will leave on its own—and although it has undermined its “credibility” with seven rate cuts, it might have a point: “there’s probably not much that central bankers can do to control” today’s inflation. The bursting of the credit bubble should be deflationary, but energy and food costs are driven by global factors outside the realm of monetary policy. Slow U.S. growth probably will “shackle core inflation,” but if price hikes become “self-fulfilling” prophesies, we’ll need “a bigger bouncer.”
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