Following a lengthy sequence of adverse supply shocks to goods, labor, and commodities that, in combination with strong demand, drove inflation to multidecade highs, we must maintain a riskmanagement posture to defend the inflation expectations anchor.
To judge the effectiveness of monetary policy, one must consider what the economy would have looked like in the absence of easing. In this light, given the severity of the shocks that have hit the economy, a better interpretation may well be that recent events validate once again the potency of monetary policy.