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This Time May Be Different, Powell Says
"We are prepared to do more if greater monetary restraint is warranted," Jerome Powell said Wednesday, following the 10th and, quite possibly, the last rate hike of the most aggressive tightening campaign in a generation.
"We are seeing the effects of our policy tightening on demand in housing and investment [but] it will take time for the full effects of monetary restraint" to manifest, especially in inflation, he added.
Powell's press conference was mostly uneventful. When asked to confirm,
I thought it was sort of ridiculous that the CNBC anchors were egging Senator Warren on right before Powell’s presser. You could have had the TV on mute and still figured out what was being said. I would prefer the Fed is closer to being right, but that seems it would be an accidental outcome at this point.
Busted
It seems you chose your handle with some clear intent. What concerns me is not whether Powell knows what he’s doing. It seems to me that he does know what he’s trying to do and his top priorities aren’t aimed at the most important constituency, us, the people, and the institutions that support us. While the stock market is important, it doesn’t produce any real output. Yet Powell hears the sharp yells of those demanding an immediate boost to the stock market. Powell says he is attacking inflation, but is he? The asides and other explanatory statements he talks about seem to indicate that he has other priorities than he avers. We’ve just had two of the three top bank failures in history, yet we kind of passed over concern for what might be happening here. Everyone seems to want any talk of systemic bank problems to just go away. More whistling past the graveyard. The last time there were rate hikes this large, this fast, was forty years ago and the banking system was different than today. While these days regulation is in many ways more lax and banks are much larger with the ability to do more, especially in derivative markets, accounting rules requiring portfolios to be marked to the market with changes in asset values reported and booked quarterly, has increased pressures on banks to absorb falling asset market values in a way that was not done in the Volcker era. Powell was, pardon the expression, just a kid when that was all going on. Is Powell’s view of “different” mean the same to him as it does to others?
Mr. Lucky,
All of your points are valid ones. The Fed has a hammer (interest rates) to deal with their mandate, and Duct tape (pick your acronym/facility) to deal with the aftermath. Given the complexities you mention, the Fed needs a little help to steer the ship.
There are other parts of our government, that have abdicated their responsibilities to us far more than Powell, and that doesn’t seem like it is going to get solved for anytime soon.
PS – the handle is not specific to anyone person – just highlighting our futility as a species to predict the future.