On May 6 I published an essay explaining why I focus on long-term real rates to evaluate the overall stance of monetary policy, including effects from both the setting of the federal funds rate and changes to the Federal Reserve’s balance sheet. Please see that essay for a discussion of why long-term real rates drive economic activity rather than short rates or nominal rates. I argued then that monetary policy had already tightened a lot, but I was unsure if that tightening would be enough to bring inflation back down to the Federal Open Market Committee’s (FOMC’s) 2 percent target in a reasonable period of time, or ... (full story)