The Fed’s transformation from inflation-denier back to Volcker-style inflation-slayer is all but complete. As Chair Jerome Powell acknowledged in his press conference this week, “we have got to get inflation behind us. I wish there were a painless way to do that. There isn’t.” But that transformation is one of the key reasons why, over the medium-term, we expect the economy to return to the moderate-inflation moderate-rate environment that was the pre-pandemic norm.
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