Mark Twain is reputed to have said, “History doesn’t repeat itself, but it often rhymes.”1 Over the past year, observers of monetary policy have been wondering whether the current tightening cycle rhymes with Paul Volcker’s monetary policy tightening of the early 1980s. There are certainly some striking similarities. Both episodes were preceded by supply shocks and sharp increases in the prices of many commodities, such as oil. Both times, this led to a rise in U.S. inflation and a corresponding sharp tightening of monetary policy. But whereas in the 1980s this was followed by a sharp recession and a financial crisis in the savings and loan industry, no recession has emerged this time around, and the financial system has remained sound and resilient, notwithstanding a small number of highly publicized bank failures. […]