Commentary
The Federal Reserve (Fed) has made remarkable progress in its counter-inflation efforts. Flows of new money into the economy—the ultimate inflationary fuel—have slowed and, by some measures, reversed. Meanwhile, consumer price pressures seem to have moderated. Signs are indeed encouraging.
It would, however, be a mistake to look for a quick end to inflationary concerns. Inflation such as this country has suffered neither lifts quickly nor easily. It will take time, and the Fed will have to continue its counter-inflation efforts for a while longer before the country can declare itself inflation free.
The news on money flows is especially noteworthy. The Fed began its counter-inflation policies only last March. It nudged up interest rates and began to unwind its “quantitative easing” program through which it used outright bond purchases to inject liquidity directly into financial markets. Subsequently, Fed policymakers stepped up their game, raising interest rates more aggressively and reversing the “quantitative easing” program so that policy has withdrawn liquidity from financial markets….