The Washington PostDemocracy Dies in Darkness

Opinion Inflation fears are premature. Here’s why.

Jerome H. Powell arrives to be sworn in as the chairman of the Federal Reserve in Washington on Feb. 5.
Jerome H. Powell arrives to be sworn in as the chairman of the Federal Reserve in Washington on Feb. 5. (Saul Loeb/AFP/Getty Images)

Regarding Robert J. Samuelson’s Feb. 19 op-ed, “Today, inflation. Tomorrow, crisis?”:

It is well-recognized that headline consumer price index (CPI) is a misleading measure of trends in inflation. The better measure is the so-called core CPI, which removes volatile food and energy prices. The core CPI for January rose 1.8 percent from a year ago that month, the same rate as in October and December. As a result, it is premature to say that inflation is out of hibernation just yet.

Moreover, the Federal Reserve uses the core personal consumer expenditure (PCE) price deflator to measure trends in inflation for conducting monetary policy. The core PCE price deflator typically is very close to the core CPI. It, too, has not exceeded a 1.5 percent annual rate for many months. (The January number is not out yet.) As a result, Mr. Samuelson was premature in fearing that the Fed will raise the federal funds rate faster than announced previously.

Lawrence "Larry" Schwartz, Fairfax

The writer was an economist at the
Treasury and Commerce departments.

Loading...