They really, really hate low rates.... Searching the Federal Reserve's website for "reach for yield" returns a nice long list of speeches in which Fed officials warn against the dangers of a long period of low rates. And yet.... Markets think both America and Britain will by 2016 be closing in on nearly a decade of ultra-low rates.... Alone among big rich economies, Japan is now actively trying to raise inflation.... Last November Fed economists published a paper arguing that lifting the inflation target to 3% would rapidly lower unemployment while allowing the Fed’s policy rate to rise higher, faster. The argument does not seem to have swayed the Fed’s monetary-policymaking committee, which continues to project inflation of at most 2% until the end of 2016. Markets reckon prices will rise even more slowly. Not only is the Fed not raising its inflation target, it is tightening while inflation remains well below the 2% target.... Just today we learned that the Fed's preferred inflation gauge rose at just 0.9% in the year to February, down from 1.2% in January.... The rich world's central banks are behaving with a dangerous complacency. Low and falling inflation will retard ongoing recoveries. Perhaps more important, this path forward leaves the rich world with virtually no cushion against future shocks.... I'm not sure how the Fed can expect anyone to take its word seriously when it has undershot its target nearly every month that target has been in place, when its forecasts make clear that it fully intends to undershoot that target for years to come and indeed on average, and when it is busy pulling away support to the economy while inflation falls ever farther below 2%. It's a joke."