The Federal Reserve is ahead of other important western central banks, in normalising monetary policy. This has provoked lively debate. Prominent questions are whether the Fed is wise to proceed with its tightening and whether it should change its inflation target. A third question is also under discussion: should the president replace Janet Yellen as chair when her term expires in January? The answers to all three questions are: no.

Why should the Fed not hasten to tighten monetary policy? Even after the latest move, the rate on federal funds is a mere 1.25 per cent. Moreover, unemployment has fallen to modest levels. This is even true for a broader measure, which allows for “marginally attached” and “part-time” workers. (See charts.)

Yet a powerful argument against tightening remains: inflation is stubbornly low. Moreover, as Janet Yellen noted in her press conference on June 14, inflation has been below the Fed’s objective for “roughly five years”. It is reasonable to ask whether a central bank that is tightening while persistently failing to hit its target takes the latter seriously.