Mirai: If inflation does not slow down, Fed policymakers will lose credibility

On 22 July, Joseph Lavorgna, the chief American economist at the Bank of San Suai, Japan, said that if inflation did not slow, policymakers would lose hard-won credibility. In a report, Lavorgna indicated that the core inflation rate had declined only six times over the past 70 years, compared to 0.9 per cent or more. In each case, inflation slowed because the Fed was tightening its policy. Lavorgna states: “The longer the Federal Reserve waits, the greater the probability that interest rates will have to rise above the required level. That is why there have been so many austerity cycles in the past that ended in tragedy. President Walsh understands this.”