Powell’s Anti-Inflation ‘Pain’

The faster the Fed gets inflation down, the better for markets.

“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” the Fed Chairman said. “The historical record cautions strongly against prematurely loosening policy.” He said the Fed won’t repeat the stop-and-start monetary tightening mistake of the 1970s that extended inflation pain and made it all the more difficult to cure.

The Biden Administration could mitigate the pain with policies that provide business certainty and encourage investment. Alas, it is doing the opposite with more regulation, spending and taxes. Even liberal economists say the President’s student loan forgiveness will add to inflationary pressure.

The good news for the Fed is that price increases have been moderating of late, and money-supply growth has been slowing for some time. The latter should portend progress in future months. But the Fed has a credibility problem because it was so wrong for so long about rising prices. That explains why Mr. Powell now has to tell markets a harder anti-inflation truth than they expect or want.

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