Economics
World’s Central Banks Got It Wrong, and Economies Pay the Price
- Policy makers are now moving much faster than telegraphed
- Fed and peers hope to contain long-term inflation expectations
This article is for subscribers only.
Even after central banks recognized they got their inflation calls wrong last year, they’ve continued to flub their policy guidance, threatening greater damage to their credibility, roiling markets and undermining the pandemic recovery.
The Federal Reserve is now expected to hike interest rates by 75 basis points Wednesday, just weeks after Chair Jerome Powell and his team repeatedly advertised a half percentage point move. It’s the latest in a series of misfires, from deeming high inflation “transitory” last year to speeding up the end of its bond-purchase program to accelerating the runoff of its bond portfolio.