Central banks should make clear what QE is for, and then reverse it

ON AUGUST 26TH central bankers will gather for their annual Jackson Hole jamboree with the shine having come off their record. A year ago they had forestalled a financial crisis during the pandemic’s first wave. Today an inflation surge has made a mockery of the Federal Reserve’s forecasts; a parliamentary committee has said that the Bank of England has a “dangerous addiction” to buying bonds; and everybody expects the European Central Bank (ECB) to undershoot, over a period of years, its shiny new “symmetric” inflation target of 2%, unveiled in July.

The disquieting sense of monetary powerlessness is compounded by the spread of the Delta variant of coronavirus, which threatens to raise prices and depress global growth. Monetary policy cannot do much about port terminals closing because of outbreaks—as China’s Ningbo-Zhoushan did on August 11th—nor about Australia and New Zealand returning to lockdowns. In America consumer confidence tumbled in the first half of August. It was not for want of monetary stimulus.