Fed's credibility is an asset whose decline could be costly

"It's easy to forget how remarkable it was that the Fed was able to look through 7% to 8% inflation while maintaining almost completely anchored long-term inflation expectations. This requires (an) extremely strong reputation," Nakamura said, something that hinges "on institutions like central bank independence and a strong track record, and those are things that take a long time to build up and perhaps not very long to destroy."