There is a sliver of good news on the economy: inflation may be moderating.  For October, the consumer price index (CPI), a key inflation barometer, came in below expectations.  Though up 7.7 percent from a year ago, it’s the smallest increase since January.

But members of the Federal Reserve (the Fed) would be wise not to repeat their earlier mistakes by reading to much into a single month of cooling numbers.

You don’t have to be a professional economist to know that inflation is insidious for working Americans, as it erodes purchasing power.  For example, in 1970, the average cup of coffee cost 25 cents, by 2019 it had climbed to $1.59.  That’s inflation and it refers to price increases across the entire economy.

For decades, central bankers led by the Fed have flatlined interest rates and created money out of thin air, first in response to financial emergencies and then to the coronavirus pandemic. What were once emergency measures became totally normal, certainly since 2008. In simple terms, over the first two decades of the 21st century, the Fed engaged in a long love affair with ultra-low interest rates and printing money.

Easy money after the global financial crisis in 2008 produced several ill effects, including the creation of multiple asset price bubbles.  As one market analyst put it, “Never in the field of monetary policy was so much gained by so few at the expense of so many”.

But now Fed officials are walking back Fed Chair Jerome Powell’s hawkish comments in his briefing that followed the November Federal Open Market Committee (FOMC) meeting.  The Fed chair emphasized that it’s “premature” to discuss a pause in rate increases. He said the goal was to get inflation back to 2 percent, as the Fed announced an unprecedented fourth consecutive three-quarter interest rate increase, taking the central bank’s benchmark funds rate to a range of 3.75 to 4 percent.

This is the highest funds rate level since early 2008 and represents the fastest pace of policy tightening since the early 1980s, as the central bank tries to slow consumer and business demand and give supply a chance to catch up.

But multiple members of the Fed are now saying it looks like time to slow the pace of interest rate increases.  For example, the president of the Philadelphia Fed recently said the central bank should “pause when it makes sense”. Then the president of the Boston Fed said: “the risk of overtightening has increased”.

And the vice chair of the Fed says “soon” it would be appropriate to move to a slower pace on rate hikes.  The FOMC gets to see one more CPI report before its next meeting on December 13-14 to decide if it is time to pull back on the level of interest rate hikes.

These dovish comments are coming from the same grand poohbahs who 18 months ago claimed inflation was transitory as they sat on the sidelines and waited for it to abate.  They ignored the alarm bells and missed a crisis in formation.

Then, when inflation got out of control, the Fed finally tightened monetary policy. It was just a year and a half too late doing so.  As history has shown, printing too much money causes inflation.

Still, Fed officials convinced themselves that inflation was a thing of the past. The threat of inflation has faded from public memory. All this was before Russia invaded Ukraine.

The takeaway from all this is that the Fed will likely dial down the pace of interest rate hikes to a 0.5 percentage point increase in December after the recent encouraging signs that October inflation cooled more than expected. If this is the case, then it raises the question of whether the Fed has the minerals to stay the course and crush inflation.