Inflation is higher than it has been in a decade, and households and businesses are fretting over their diminished purchasing power. Monetary-policy makers insist price hikes are transitory, but there is pressure on the Federal Reserve to begin tapering. Many expect the Fed will reduce bond purchases by $15 billion a month starting in November.
Monetary-policy normalization is a good thing, and we should be eager for the Fed to revert to pre-Covid operations. But tapering isn’t a panacea for surging prices, because widespread supply-chain problems, which are out of the central bank’s control, are contributing to price increases.