The Federal Reserve has finally started to raise interest rates—but it’s a year late and a few hundred basis points short.

My former colleague Nick Timiraos recently published an excellent book, Trillion Dollar Triage, on Fed chairman Jay Powell’s actions during the early days of the pandemic. It shows he was the right man for the job…at the time. Some critics had questioned his lack of economic training when he was chosen. But Powell has a first-class temperament and deep experience in financial markets. When the crisis hit, he knew what to do. “Think big,” became his mantra. His message to Fed colleagues on March 12, 2020, Timiraos reports, was this:

“This is a once‐in‐a‐lifetime global historical disaster. We have these tools, and if we don’t use them to their fullest extent, I don’t know how I’ll be able to look back and explain to the public why we didn’t do that in this situation. It’s different from all the other situations we’ve been in.”

But Timiraos’ book came out before Powell’s legacy was set. While he was inordinately fast in moving to address the crisis, he has been inordinately slow in moving to address the inflation building up in its aftermath. He would have done well to consult former Treasury Secretary Lawrence Summers, who has his generation’s most powerful economic mind, and has almost perfectly predicted every step of events that followed. You can find his latest thoughts in his column this week in the Washington Post, here. The headline tells the story: “The Fed is charting a course to stagflation and recession.” The conclusion:

“The past 60 years of economic history record few if any instances of inflation declining substantially without significant slowdown. Policymakers can either learn from that history or repeat it.”

That view seems to be sinking in with many of the CEOs I talk with. This year still looks strong. But the sad cycle of energy and commodity price increases accompanied by wage and salary demands will continue to drive inflation and leave the Fed hopelessly behind the curve in fighting it. This will not end well. The only open question is when. I invite CEO Daily readers to make their best predictions.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

U.S. support

The U.S. will give Ukraine a $1 billion aid package that includes antiaircraft and anti-armor missiles, as well as Switchblade kamikaze drones that can be carried into the battlefield. But no fighter jets or no-fly zone, as requested by Ukrainian President Volodymyr Zelenskyy in his address to Congress yesterday, which invoked the ghosts of 9/11 and Pearl Harbor. Zelenskyy also spoke to the German Bundestag this morning, referring to the creation of a “new wall” in Europe. Meanwhile, Ukrainian forces have just launched a major counteroffensive against Russia’s troops. Financial Times

Anti-merger bills

The Democrats in the U.S. have introduced bills that would ban mergers worth more than $5 billion, as well as those “resulting in market shares above 33% for sellers or 25% for employers.” Elizabeth Warren and Mondaire Jones are the sponsors, but no Republicans have signed on as yet, which could limit the bills’ chances. The Hill

Microsoft antitrust

The French cloud computing company OVHcloud has filed an antitrust complaint with the European Commission, alleging market abuse by Microsoft. According to the Wall Street Journal, the complaint was filed last summer and alleges that Microsoft’s software licenses, such as that for Office, makes it more expensive to use competitors to the Azure cloud. Wall Street Journal

Japanese earthquake

Northern Japan experienced a serious earthquake yesterday that killed four and left thousands of people without power. The quake, near Fukushima, also derailed a bullet train. However, fears of a tsunami fortunately went unfulfilled. Fortune

AROUND THE WATERCOOLER

Western companies

Jeffrey Sonnenfeld’s team at Yale have updated their list of Western companies and their positions on/in Russia, to create more nuanced categories. Here they explain why “naughty and nice” has given way to “withdrawing all business,” “suspending operations,” “reducing activities,” and “economic collaboration.” Fortune

Russian army

The Russian army continues to perform really badly in its invasion of Ukraine, with heavy losses and not much to show for them. Here’s Phillips O’Brien, professor of strategic studies at the University of St Andrews in Scotland: “If the Russian army doesn’t start moving soon, it’s really screwed.” Fortune

Norwegian hydrogen

Germany may start importing green Norwegian hydrogen to make up for the Russian natural gas it so needs to abandon. Would need to build a new pipeline first, though. Bloomberg

Omicron + Omicron

The two main substrains of the Omicron coronavirus variant have apparently combined into a new virus that has been spotted in Israel. No need to worry yet, say scientists. Fortune

This edition of CEO Daily was edited by David Meyer.