The "Transitory" Mistake!

Central Banks across the West (Fed, BoC, ECB and BoE) committed a significant blunder in 2021 when they termed inflation “transitory” and let it run wild.

In fact, the Fed was buying Mortgage Backed Securities (MBS) and expanding its balance sheet under its colossal QE program last year when inflation was highest since the 70s.

The post covid fiscal and monetary excesses were the principal reasons inflation became a monster. The inflationary fire was exacerbated by the rhetoric that CBs undertook early in the fight while ignoring the repercussions of their actions.

As a result, they were way behind the curve and lost their hard-earned credibility.

The “transitory” mistake is now repeated by the Bank Of Japan (BoJ). The Contrarian central bank, which has been buying unprecedented JGBs and has refused to abandon the YCC policy, is creating a monster of its own.

As I head home from Japan…