When Federal Reserve Chair Jerome H. Powell addresses the public Wednesday, he might be tempted to take a bow. Mr. Powell has been a steadying force through President Donald Trump’s trade wars and repeated threats to fire him, a once-in-a-century pandemic and, now, the worst inflation crisis in 40 years.
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With inflation easing, calls are growing louder for the Fed to stop raising interest rates. While that is tempting, Mr. Powell cannot declare victory over inflation yet. Another rate increase is all but certain on Wednesday and Fed officials need to keep signaling they are still in a “hawkish” mode in which taming inflation is their sole objective.
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End of carouselAlso on the Editorial Board’s agenda
- The misery of Belarus’s political prisoners should not be ignored.
- Biden has a new border plan.
- The United States should keep the pressure on Nicaragua.
- America’s fight against inflation isn’t over.
- The Taliban has doubled down on the repression of women.
- The world’s ice is melting quickly.
Ihar Losik, one of hundreds of young people unjustly jailed in Belarus for opposing Alexander Lukashenko’s dictatorship, attempted suicide but was saved and sent to a prison medical unit, according to the human rights group Viasna. Losik, 30, a blogger who led a popular Telegram channel, was arrested in 2020 and is serving a 15-year prison term on charges of “organizing riots” and “incitement to hatred.” His wife is also a political prisoner. Read more about their struggle — and those of other political prisoners — in a recent editorial.
The Department of Homeland Security has provided details of a plan to prevent a migrant surge along the southern border. The administration would presumptively deny asylum to migrants who failed to seek it in a third country en route — unless they face “an extreme and imminent threat” of rape, kidnapping, torture or murder. Critics allege that this is akin to an illegal Trump-era policy. In fact, President Biden is acting lawfully in response to what was fast becoming an unmanageable flow at the border. Read our most recent editorial on the U.S. asylum system.
Some 222 Nicaraguan political prisoners left that Central American country for the United States in February. President Daniel Ortega released and sent them into exile in a single motion. Nevertheless, it appears that Mr. Ortega let them go under pressure from economic sanctions the United States imposed on his regime when he launched a wave of repression in 2018. The Biden administration should keep the pressure on. Read recent editorials about the situation in Nicaragua.
Inflation remains stubbornly high at 6.4 percent in January. The Federal Reserve’s job is not done in this fight. More interest rate hikes are needed. Read a recent editorial about inflation and the Fed.
Afghanistan’s rulers had promised that barring women from universities was only temporary. But private universities got a letter on Jan. 28 warning them that women are prohibited from taking university entrance examinations. Afghanistan has 140 private universities across 24 provinces, with around 200,000 students. Out of those, some 60,000 to 70,000 are women, the AP reports. Read a recent editorial on women’s rights in Afghanistan.
A new study finds that half the world’s mountain glaciers and ice caps will melt even if global warming is restrained to 1.5 degrees Celsius — which it won’t be. This would feed sea-level rise and imperil water sources for hundreds of millions. Read a recent editorial on how to cope with rising seas, and another on the policies needed to fight climate change.
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History is full of painful examples in which central banks gave up the inflation fight too soon. The United States’ experience in the 1970s is one such warning. Inflation appeared to be moderating twice during that decade, only to spike again because of energy crises. It’s nearly impossible to predict when large-scale shocks will rock the economy, but the memory of $5 gas remains fresh (even though it’s around $3.50 now). It is far worse to let up too soon and see inflation roar back than it is to stay tight until it is clear inflation is stamped out. The fact that lower-income workers are not yet facing layoffs underscores how robust the labor market remains and should also embolden the Fed to stay focused on inflation.
Some prominent voices, including former treasury secretary Lawrence H. Summers, are urging the Fed not to signal any further rate increases after Wednesday. They argue flexibility going forward is key. But to truly preserve its freedom to act, the Fed will have to continue talking tough. Investors are eager for any signs that the Fed is pausing rate hikes. Markets have already been rallying this year, largely on the belief that the Fed will end its tightening sooner than expected — and even start cutting rates by the end of the year. If markets continue rising on optimistic expectations about the Fed’s intentions, it would get only harder for the Fed to dash them, risking a painful market reaction. Unfortunately, Mr. Powell needs to push back.
For now, the Fed needs to keep talking tough on inflation and signaling more hikes. If the Fed determines that it can ease up later this year, it will be easy to lighten up then, exceeding expectations rather than confounding them.