At the Jackson Hole meeting, the Fed ponders an uneven recovery

BUSINESS CYCLES are never perfectly symmetric across time and space. Yet they have rarely been as uneven as the rebound from covid-19. Some parts of the global economy are straining to meet roaring demand even as others limp along, battered by the spread of the virus. It is enough to take the fun out of monetary policy. Indeed, the Delta variant kept attendees of an annual symposium for central bankers from meeting in Jackson Hole, Wyoming, in the shadow of the majestic Teton mountains, on August 27th. Instead, they peered at their computer screens as they discussed how to shepherd an unbalanced economy through uncertain times.A pressing question loomed over the proceedings: just how and when to tighten policy given high inflation and lingering unemployment. Tweaks to the Federal Reserve’s framework in recent years are meant to give it room to manage such difficult circumstances. It now aims to hit its 2% inflation target on average and will court high inflation to make up for past shortfalls. But surging prices are testing this approach. Data released as the conference began showed that the Fed’s preferred measure of inflation had risen to 4.2% in July, the highest in 30 years. Jerome Powell, the Fed’s chairman, made no suggestion to his fellow participants that he would drastically change course, and confirmed that the Fed might begin to taper asset purchases later in the year. But policy, he cautioned, would have to change as new data come in.