In a clear illustration of how much things can change in a year, the US Federal Reserve looks set to kick off a new era of policy tightening in 2022. That could include raising interest rates at least three times this year and possibly also, a gradual reversal of its bond buying program which it has been using in tandem with low rates and which has effectively seen the Fed double the size of its balance sheet over a period of less than two years. Officials had originally kicked off 2021 with plans to keep interest rates at rock bottom for at least two more years and judged elevated inflation pressures as a temporary blip in a financial system recovering from a pandemic. However, inflation has skyrocketed in 2021, with consumer prices in November climbing 6.9 per cent from a year ago, the fastest pace since 1982. For months, the Fed’s mantra has been that inflationary pressures are temporary and they would eventually subside once the US economy moves past the pandemic. However, supply pressures have led to a shortage of goods, and officials have seen a persistent gaping hole in the US labour force, with nearly 2.3 million workers still missing. Fed chairman Jerome Powell still...