Is The FED Doing Enough To Fight Inflation?

That is the question raised in an article by ALLAN H. MELTZER called The Fed's Anti-Inflation Exit Strategy Will Fail: Sooner or later the pressure to lend out excess bank reserves will be unstoppable.

"When will inflation start? The date is uncertain. But the triggering event will be either a sustained increase in bank lending or a large increase in Fed purchases of government debt."

"With the exception of the early years after Paul Volcker became Fed chairman in 1979, the Fed has paid no attention to money growth."

"The Federal Reserve has a well-known dual mandate to prevent both inflation and unemployment. It chooses to act on only one part of its mandate at a time. That cannot be the best way to achieve both targets, and it has failed repeatedly to bring low inflation and low unemployment."

"But the Fed abandoned its success by keeping interest rates too low after 2003."

"...the Fed should announce a policy for preventing inflation that reduces the enormous stock of excess reserves, such as by selling securities."