Contain

Historically, curbing inflation has required a restrictive policy using positive real interest rates. The assumption is that the current banking woes will have an economic impact equivalent to a hike of a half-percentage point or more in the fed-funds rate.

The good news is that the latest Fed data show signs that the crisis is stabilizing, if not being fully contained. The Fed provided 354 billion dollars to banks through its various credit facilities, as of Wednesday, an increase of 36 billion dollars from the total a week earlier.