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Central Banks Are Still Far Behind the Inflation Curve

Inflation at current levels is a severe economic, social, and political problem – a scourge that disproportionately affects the poor and the financially unsophisticated. So, why are the Federal Reserve, the European Central Bank, and the Bank of England actively fueling it?

NEW YORK – Major central banks have lost the plot when it comes to fulfilling their price-stability mandates. In April, 12-month US consumer price index (CPI) inflation was at 8.3%, down slightly from 8.5% in March, and the US Federal Reserve’s preferred inflation gauge, the core personal consumption expenditures price index (which excludes food and energy), was at 4.9%, down from 5.2% in March. But what the Fed should be doing is the opposite of what it actually is doing.