Monetary Mojo

While inflation is currently quite elevated, it is important to note that monetary policy works with lags of 12-18 months before the impact of rate changes are fully felt. Thus, the Fed would have had to (among other things) anticipate the severe supply-chain problems we have been experiencing and would have had to start raising rates soon after the initial lockdowns of March/April 2020 to keep current inflation subdued. Impossible.