Commentary
Since the Federal Reserve began its counter-inflation effort last March, it has acted forcefully. It has raised its benchmark federal funds interest rate some 1.5 percentage points and reversed its long-standing program of quantitative easing.
Instead of buying bonds to inject money into the financial system, it has begun to withdraw some of those inflationary monies by selling from the hoard of securities it had built up previously. And the Fed has promised to continue withdrawing liquidity and raising interest rates until inflation comes under control.
But in no small part, because its tardy response to inflation last year eroded public confidence, the Fed now faces an especially tough fight….