Inflation has stubbornly stayed lower than the Federal Reserve has desired for the past eight years, and it has been falling in the last few months. In a move that could well define her chairmanship of the central bank, Janet Yellen is betting that falling prices are a temporary blip that will soon be forgotten.
If her forecast is right, the Fed policy meeting on Wednesday will turn out to be a nonevent in a gradual return to normal policy. If she's wrong, the June 2017 meeting will look like a giant unforced error that unnecessarily prolonged an era in which the Fed proved impotent to get inflation up to the 2 percent level it aims for and lost credibility needed to fight the next downturn.
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