Economist's View: WSJ Commentary: Monetary Policy Does Not Affect Core Inflation: The Wall Street Journal can do better than this. This article by Alan Reynolds of Cato claims that monetary policy has no effect on prices and inflation, a claim that is just plain dumb:
The Fed's Crude Policy, By Alan Reynolds…. [I]t is difficult to discover any coherent relationship between the funds rate and... measure[s] of inflation not distorted by energy prices.… The only way to link the fed-funds rate to inflation is to assume the Fed suffered from "energy illusion"--focusing on fluctuating energy prices rather than the impressive stability of other consumer prices. Perhaps the best way to show this is to look at the consumer price index with and without energy, so there can be no doubt that food prices (which are also excluded from core inflation) were irrelevant…
Here’s the problem.... Suppose that monetary policy perfectly controlled inflation… a graph of inflation over time… would be a flat line with no variation from its target value whatsoever, and it would be uncorrelated with any other variable. The fact that there is no correlation between inflation and the ff rate would be an indication of the success of the policy, not that inflation and monetary policy are unrelated….
Monetary policy does not affect prices and inflation? This does not belong in the Wall Street Journal.