Fed Reserve negotiating with itself on inflation as global economy recovers

Federal Reserve president James Bullard recently said that inflation is likely above 2% over the forecast horizon.

If you’re worried about the recent surge in inflation, some reflection on the past decade might prove useful therapy. Central banks are willing to look beyond price spikes they consider transitory, in large part because of a perceived need to atone for missteps after the last big slump.

It's hard to understand why the Federal Reserve appears unfazed without appreciating how much past forecasting errors weigh on policy deliberations. In recent years, global monetary chiefs have misread signals time and again. They were willing to withdraw stimulus and raise interest rates because projections told them higher inflation loomed. But it