How the Fed Bond Binge Predictably Stoked Inflation

https://www.cfr.org/blog/how-fed-bond-binge-predictably-stoked-inflation

INTRO:

Back in September 2020, the Fed’s preferred inflation gauge (Core PCE) was running at 1.6 percent, and Fed chair Jay Powell was worried about disinflation. The Fed bought up $87 billion in Treasuries and $34 billion in mortgage bonds that month as part of an ongoing strategy to push inflation up to 2 percent. 

Many thought the bond-buying wholly insufficient, and called for more fiscal support to avoid “Japanification” of the U.S. economy. But we disagreed, and predicted, on the basis of the Fed’s experience with bond-buying during the Great Financial Crisis (GFC), that the Fed’s COVID bond-buying program would push inflation past 2 percent in February 2021.