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Project Syndicate: In March, you wrote that higher inflation was “inevitable and therefore not regrettable,” because it was “a side effect and a consequence of the robust recovery,” which amounts to a “massive policy victory.” You also predicted that price stability would return in the medium term, though you also noted in June that the US Federal Reserve’s ability to raise interest rates sufficiently was constrained by forward guidance. Are you still relatively sanguine about US inflation, and was the Fed’s latest interest-rate hike the right call? How effective will the Inflation Reduction Act (IRA) be in supporting the Fed’s efforts to ease inflation?

J. Bradford DeLong: All confident predictions of a return to price stability have been upset by Russian President Vladimir Putin’s attack on Ukraine and the resulting shocks to energy and grain prices. With the war extremely unlikely to be brought to a rapid conclusion, a soft landing may no longer be possible. But we should still try for one.

Is the Fed’s latest interest-rate hike the right call? My strong belief is that the central bank ought to have moved its short-term policy rate to the appropriate level, and then paused. Instead, rates are below what the Fed thinks is the appropriate level, but there is uncertainty about how much higher the Fed believes it will end up going. That does not make for confident markets, investors, or businesses….