Economics: Yes, Fed monetary policy is too tight. That “2.7%” is the trailing one-year change:

Claire Jones & Harriet Clarfelt: Fed’s preferred inflation metric remains at 2.7% in April: ‘US inflation held at 2.7 per cent in the year to April, according to the metric the Federal Reserve uses to set its target for price pressures. Friday’s data on personal consumption expenditures was in line with economists’ expectations that inflation would remain the same as in March… <ft.com/content/6c0b34a3-63d7-4dad-865b-…>

Certainly no signs of any meaningful uptick at all. And also no signs of a weakening in growth that would pull inflation further down significantly. There are questions:

• Should we still give credence to our beliefs that current interest rates are well above r*, and hence that substantial economic weakness is coming—that the Federal Reserve is still hitting the economy on the head with a brick, albeit a small brick?

• What are the risks involved in the Federal Reserve having to suddenly move fast and far, the Federal Reserve to wait to see economic weakness before it starts cutting interest rates is to all but guarantee that it will have to move fast and far?

• Elementary optimal control theory says that without very good reason you should set your course so that you do not have a strong opinion whether you next want to move the tiller left or right; what is the good reason not to be following that principle right now?

Yet when I ask “what is the good reason?” and “wouldn’t you be happier if, all else being equal, interest rates right now were a full percentage point lower and thus closer to r*?”, I do not get back anything I find coherent.