The Fed Should Take Action at Jackson Hole to Reduce Inflation

They must immediately and gradually reduce the $120 billion per month bond-buying program. They also must immediately and gradually raise interest rates.

This week, the Federal Reserve (Fed) will meet for its annual symposium at Jackson Hole, Wyoming. This symposium is sponsored by the Federal Reserve Bank of Kansas City, which has held this event since 1978. The Fed usually doesn’t set or change any policy during this time, but rather it focuses on general economic issues facing the U.S. and world economies.

This year it should move to set or change current policy. The Fed’s Open Market Committee will meet again for its regularly scheduled meeting next month, but each month that action is delayed means that the action must be stronger when finally taken. Frankly, Fed action was due much earlier this year.

What action should the Fed take?

Inflation since January has been a problem for the U.S. economy. Since January, consumer prices, as measured by the Consumer Price Index (CPI), have increased by more than 4%. If this rate continues, inflation for all of 2021 will be more than 7%. This greatly exceeds the Fed’s target, which is usually between 2% and 3%.

While the Fed, as well as the Biden administration, continues to say that the…