The Fed chairman, Jerome Powell, finally acknowledged the obvious: the era of near-zero interest rates is behind us. In his speech at Jackson Hole, Powell presented a new operational framework that reflects the reality of greater inflationary pressures. Although he stated that there is "a lot of continuity" with previous statements, the reality is that the Fed is adapting to a very different economic landscape.
The question is: are they arriving late to the party? By removing the language about low rates and returning to a flexible inflation framework, Powell seeks to anchor inflation expectations. But, will it be enough?