What you're not hearing about Jay Powell, Mission Accomplished!

Thursday, January 27, 2022
Donald L. Luskin

We don't need to adjust policy to keep inflation from getting entrenched because inflation isn't getting entrenched.

Update to Strategic View

Powell said three times in yesterday's post-FOMC press conference that the Fed will use its policy tools to keep high inflation from becoming entrenched. Market-implied longer-term inflation expectations, such as the 5-year 5 years forward TIPS breakeven spread, show no entrenchment at all. Either does the University of Michigan consumer sentiment survey of 5-10 year inflation expectations. With the mission already accomplished, it’s not clear the Fed needs to persist in its seeming urgency to adjust policy.