” Fed watchers expect the Federal Open Market Committee will keep rates steady when they meet on March 19-20. In light of the CPI data, that’s a defensible move.” ~Alexander W. Salter
“Higher rates could be a sign of loose money, not tight, depending on how far from the policy change we’re looking and how fast the market adapts.” ~ Alexander W. Salter
“At most, large deficits impelled the Fed to support the market for government debt by purchasing more debt than it should have. The central bank, not the fiscal authorities, is the residual determiner of aggregate demand.” ~Alexander W. Salter
“Team Transitory’s narrative just doesn’t cohere. Whether we’re trying to explain the Great Inflation of the 1970s and early 1980s, or the inflation of the past two years, we need to rely on demand-side mechanisms.” ~Alexander W. Salter
“Microeconomic relative-price dynamics increasingly drive inflation measurements. That means the Fed should not be afraid to ease off the brakes.” ~Alexander W. Salter
“The Fed’s self-conception as an apolitical technocracy blinds it to the degree to which it has weighed in on fundamental political issues, which instead ought to be deliberated in Congress.” ~Alexander W. Salter
“Even if Fed economists have underestimated the natural rate of interest by half, monetary policy looks slightly tight. It looks very tight if the natural-rate figures are anywhere close to correct.” ~Alexander W. Salter
“After a rough couple of rounds, inflation has come out swinging. It doesn’t have the legs for a knockout punch, but it remains a troublesome opponent.” ~Alexander W. Salter
” Some combination of fiscal and monetary policy remains the best explanation for the once-in-a-generation inflation rates that peaked in summer 2022, as well as their gradual decline.” ~Alexander W. Salter
“Once a bastion of sound reporting, the Wall Street Journal’s economy desk is slowly descending into incoherence…Simple economics demonstrates why the inflationary-profits hypothesis is bunk.” ~Alexander W. Salter