This week, it will become more apparent to economists and policymakers across the globe that the Federal Reserve is in a Catch-22 situation of its own making. Forced by worries about high and persistent inflation, the Fed will likely go down in history as having raised interest rates by the same large amount in three consecutive policy meetings. But because it is doing so in a weakening economy, it will face criticism for damaging not just domestic economic well-being, but also global growth.

This unfortunate situation the Fed is in — damned if you do, and damned if you don't — is illustrative of a deeper issue. Having missed the window when a "soft landing" for the economy was feasible, (that is, lowering inflation without much damage to the economy), the Fed now finds itself distressingly far from the world of "first-best" policymaking. In other words, rather than have at its disposal highly effective, timely and well-targeted measures to battle inflation, this Fed has ended up in a world in which virtually all its policy actions can cause significant collateral damage and unintended adverse consequences. Many politicians, companies and households risk thinking of the Fed as part of the problem and not part of the solution.

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