& BRIEFLY NOTED: FOR 2022-27-27 Su: A week ago I was saying that the Federal Reserve has launched itself into its triple jump, and the question is whether it will manage to stick the landing. A week ago I was very confident that the bond market, at least, believed in the Federal Reserve—the inflation expectations were still very well anchored and thus let the Federal Reserve had enormous policy flexibility to react month by month, and adjust the pace at which it tried to cool down aggregate demand so as to keep the recovery going at a strong pace. This looked to me like a big victory. Now we face the prospect of a rather large supply shock.... Nevertheless, in my view, the right policy for the Federal Reserve would be to continue to prioritize recovery as long as 5 year/5 year inflation expectations continue to remain well-anchored, but to accept the employment-reduction costs needed to keep the anchor if the bond market begins to move.... Why do I think that we should engage in this form of forward bond-market-expectations-of-inflation targeting? One reason is that bond-market expectations are the best read we have of inflation expectations, and that the near-consensus is now that persistent moderate inflation is overwhelmingly an expectational phenomenon. To look at anything else is to look in the wrong direction...