The reasons inflation isn't here to stay

With inflation reports coming in so high, it's getting harder to defend my membership on "Team Transitory." Yet I remain committed to the view that higher inflation is, in fact, transitory: After a few years of above-average price inflation, prices will return to a steady state of about 2% annual growth, as has mostly been the case since the early 1990s.

The Marriner S. Eccles Federal Reserve building in Washington, D.C.. Chair Jerome Powell has made this goal more flexible, by instituting "average inflation targeting," and this policy does give the Fed some leeway in deciding when the rate of price inflation should fall. But it doesn't grant the Fed license to allow 5% annual inflation for the next five or 10 years. Foto: Bloomberg photo by Andrew Harrer.

The case for Team Transitory is not about whether the next pending inflation numbers will come in high or low. Instead it consists of the following two propositions:

The Federal Reserve can control the rate of price inflation...

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