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Opinion: Powell risks his legacy if he doesn’t start tapering soon

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The Federal Reserve should move quickly to taper purchases of Treasury and mortgage-backed securities, or it risks losing its independence from the whims of politicians and financial markets.

In August 2020, the Fed announced that it would give priority to “maximum employment” and no longer act pre-emptively to stem inflation. It would accept a period of inflation greater than 2% to compensate for undershooting that target in the 2010s, but the Fed has been vague about how much overshooting is tolerable.

Since April, the annualized pace of month-over-month CPI inflation has been 8.7%. That should not be attributed merely to a rebound in pandemic depressed prices for airplane tickets, rental and used cars, hotel rooms and the like. Supply-chain problems—such as those for computer chipssevere shortages of workers in manufacturing and transportation, climate-change impacts on agricultural…

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