Inflation Isn’t Transitory, but It Isn’t Permanent Either

The Federal Reserve is in the early stages of tightening monetary policy to fight inflation. Most Fed watchers expect 50-basis-point interest rate hikes in June and July and more after that. Quantitative tightening to shrink the Fed’s balance sheet will also begin soon.

As always, the Fed will be graded on its performance by market reactions, the commentariat, and some members of Congress. In fact, the grades are already pouring in with an overwhelming majority giving the Fed low marks for not tightening sooner. In the jargon, it is “behind the curve.”