Can the Fed pull off an “immaculate disinflation”?

FIGHTING INFLATION gets harder the longer it is put off—and the Federal Reserve has waited quite a while. For most of 2021 the central bank said that it had the tools to slow price rises, but saw no need to put them to use. Now investors are coming to terms with the fact that the Fed will have to deploy them at scale. Since March 1st the three-year Treasury yield has risen by more than a percentage point, the biggest absolute change since yields collapsed in January 2008 during the global financial crisis.The move reflects the emergence of expectations that the Fed will increase interest rates by another two percentage points this year, having already raised them by a quarter of a point on March 16th. The impact has been felt worldwide. On March 28th the Bank of Japan promised to buy Japanese government debt in unlimited quantities over four days in order to defend its cap on the ten-year government-bond yield. The yield on ten-year German bunds, which turned positive only in January, now stands at over 0.6%, even as soaring energy prices darken the growth outlook.