My long take on inflation. Timing was fortuitously good — right after the Fed's sort-of pivot, which I was able to incorporate 1/ nytimes.com/2021/12/16/opi…
I say sort-of pivot because while the Fed has stopped saying "transitory", it still seems to believe that much of the inflation we're currently experiencing will fade away without the need to impose a lot of economic pain 2/
One odd thing about this debate is that the actual policy demands of the inflation hawks have been pretty moderate: an end to bond purchases (which I've always supported) and a baseline of fairly modest rate hikes. And that's what the Fed just delivered 3/
The Fed is still betting that it can slow inflation with little pain by tapping the brakes lightly. Very curious to see how the hawks react. Will Jason Furman say "OK, the Fed is following my recommendations?" Will Larry S make a big deal over 3 rate hikes instead of 4? 4/
Planning to devote tomorrow's newsletter to the question of what happens if the Fed is wrong 5/
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