If there is one thing we know about monetary policy, it is that its effects are not often felt until after long and variable lags. In general, it takes between twelve and eighteen months for interest rate changes, whether up or down, to have their full effect on the economy.

This makes it all too likely that Jerome Powell’s belated conversion today at Jackson Hole to the idea of the need for interest rate cuts will have come too late to avoid a recession. This would appear to be especially the case if any of the numerous downside risks to an already weakening economy were to materialize. It would also appear to be the case if the Fed were to cut interest rates at the snail’s pace of twenty-five basis points at each meeting rather than at the fifty basis points by which it raised interest rates to regain inflation control.

Mr. Powell’s conversion to the need for interest rate cuts should have come as no surprise, considering the considerable progress that has been made in reducing inflation........

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