The Fed has failed to control the “inflation narrative” over the last year, and that failure has tarnished the central bank’s reputation for financial stability, opines an article by Mohamed El-Erian in Financial Advisor. And the longer it takes for the Fed to reign in this inflation surge, the more damage to the economy and social equity in this country, and eventually abroad.

With the central bank’s inflation forecasts off their mark, longer-term expectations have veered widely away from their 2% target; University of Michigan revealed that their measure for 5-10 years out has now reached 3.3%. That disparity has caused turmoil for 2-year Treasury note yields, which hold a vital place in the global marketplace. Also rocking the boat are the Fed’s attempts to be precise, which have been anything but: it first indicated two 50-basis-point increases, an idea that was then bumped to the sidelines by speculation of a 75-basis-point increase, something that caused even more turmoil in the markets.

While the Fed chases after inflationary developments, they run into the deeper dilemma of whether to tighten policy so much that they risk a recession, or keep policy looser and allow inflation to rampage for at least the next year. This sort of indecisive back-and-forth is usually more rampant in emerging markets, not one of the most well-established central banks in the world economy, the article maintains. And indeed, the Fed’s actions will ricochet around the world and cause instability in more vulnerable emerging markets, as well as damaging domestic economic stability and putting more pressure on those who are already vulnerable.

But there are steps the Fed can take to regain control, with the first being to reveal what analysis it used that allowed it to continually miscalculate inflation for so long, and what it’s done to rectify that mistaken analysis. Otherwise, it will lose credibility in the market and lead to a deeper swerve away from inflationary expectation.  Next, the Fed must take stronger action in combatting inflation, such as raising rates by 75 basis points (which they did yesterday after the article was published), and give people the idea that this is but one temporary moment in a longer journey.

The Fed should take its cue from the European Central Bank, which has recently taken steps in the right direction to avoid “spread fragmentation.” Delaying these moves will only increase inflation expectations as well as the speed of rate hikes, which could send the U.S. economy into a recession. While the central bank missed the moment last year when it insisted that inflation was “transitory,” there’s still time for it to sidestep doing even more damage to the economic prosperity of the American people.