What you're not hearing about when inflation is finally going to be transitory

Powell has introduced a new catch-phrase: he is looking for "clear and convincing" evidence that inflation is slowing. The Fed will not require "mission accomplished" to back off its hawkish course. Year-on-year inflation has already produced its first sequential fall in eight months, and market-implied inflation expectations have sharply fall from last month's highs. M2 money supply growth has set a new historic record -- the entire increase during the pandemic has been due to relief and stimulus payments. Based on historical relationships, this explains much of the present inflation. But with no new spending programs, M2 growth is now more than a year off its peak, and the inflationary impulses it transmitted with approximately a one-year lag should start to moderate. Ongoing scarcities due to Ukraine and China lockdowns are unpredictable but ultimately transitory, but the moderation of money growth is already entirely baked in the cake.