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The writer is the head of Rockefeller International. His last book is’What is wrong with capitalism?‘

After Donald Trump chose the nuclear option to connect his introductory threats, adding fears of global recession, US Federal Reserve Chairman Jay Powell explained that the central bank is not in a hurry to respond. However, the market is already pricing in four price cuts this year, indicating that soon the Federal Reserve will choose to stimulate growth to control inflation.

This path would undermine the accreditation data of the Federal Antosmic Reserve. For five consecutive years, the US Central Bank failed to achieve the goal of inflation by 2 percent. Through her own estimates, he will fail again this year and next. To date, the only general number that paid a price is Joe Biden.

As for the governors of the Federal Reserve, they continue to make excuses for the loss of inflation – the disturbances caused by COVID locks, then huge government spending during the epidemic and definitions now. Most economists accept these excuses and buy the Federal Reserve Bank argument that when it is modified for inflation, its rates are still “restricted”.

Compared to the era of easy money over the past fifteen years, when real rates have turned to negative for the first time, the real federal backfill rate is about 1.8 percent looks relatively high. Compared to the standards before 2009, the rate is not very high and was not restricted enough.

Whether the scale is the consumer price index or the preferred data of the Federal Reserve on Personal Consumption Expenses, the constantly high inflation in the past five years has been eliminated the low low inflation of the past twenty. Now, the consumer price index and PCE are much higher than it was in feeding He continued to hit his 2 percent target since the beginning of this century.

The last PCE report came at a full point above the Federal Reserve goal. However, conservatives consider the time reduction in the belief that the increase is in Economic inflation The definition rate this year can be “temporary”.

It was difficult to find evidence of the restricted federal reserve. The latest job report on Friday showed that unemployment remains low and fixed. House prices in the United States are high compared to medium income, which puts a dream of ownership of homes far from hand. Despite the last correction in the financial markets, the assessments remain high for asset prices, which mainly benefit from the wealthy.

In 2020, the Federal Reserve recently had the idea of ​​allowing inflation to operate higher than its long -term target to make up for inflation runs without the goal, but not the other way around. This “asymmetric” bias tends in a wrong way. Historically, high inflation has always led to slower growth, and inflation has not decreased. Returning to steam engines, new technologies often increased productivity, which led to low prices with low prices.

If there is anything, there is a condition to reduce the target less than 2 percent. This number was based on a scattered suspension in the eighties of the last century by a New Zealand official, who was trying to refer to the seriousness of his nation in fighting inflation – then running around the world.

The signal worked. The inflation decreased and the goal of 2 percent was arrested. Now, the sign is going in the United States. In the rest of the world, many central banks are more serious, running inflation in or at least closer to their goals.

The Federal Reserve confirmed its bias last September. In response to the simple signs of weakness in the labor market, reduce its main rate by 50 basis points, and double what the market expects. Stock prices jumped again, and inflation declined. It is not surprising that the market is now betting that it will respond similar to Trump’s definitions with more price cuts.

The federal reserve criticism is often seen as boycotting the forearms that want to restore the golden standard or tamper with the independence of the central bank. But the main reason for the liberalization of the federal reserve from political pressure is to take unpopular steps to control inflation, when necessary. Independence should not exclude its accountability from repeated failures to fulfill the aim of inflation. The Federal Reserve must reaffirm his independence by not kneeling to pressure Trump, who wants to reduce the rate now.

Americans continue in a ball of the highest. Opinion polls show that inflation is very anxious and confident in the federal reserve decreases sharply. On Friday, Powell admitted that the risk of expecting an enlargement firmly firmly. After losing his goal for many years, it will be wrong for the federal reserve to reject the repercussions of inflation from the definitions as transitional and return again to stimulate the economy.