Inflation Has Moderated, the Fed Stands Ready

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Inflation has started to moderate, Ben Bernanke tells the JEC.

He pointed to a market measure showing that inflation expectations have come down, signaling investors expect more economic weakness ahead.

That is putting it mildly. According to the Cleveland Fed, 10-year expected inflation has fallen to 1.37%. In ordinary times, the Fed aims to keep inflation between 2% and 2.5%. Even if you are excessively cautious, and believe that a spell of higher-than-target inflation is never a good idea, expected inflation is now too low and needs to be increased. Bernanke says the Fed stands ready to act. I keep wondering, what is it waiting for?

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Clive Crook is a senior editor of The Atlantic and a columnist for Bloomberg View. He was the Washington columnist for the Financial Times, and before that worked at The Economist for more than 20 years, including 11 years as deputy editor. Crook writes about the intersection of politics and economics. More

Crook writes about the intersection of politics and economics.

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