Powell Insists Fed Policy’s ‘Restrictive.’ Critics See A Man In Denial
The tedium of central banker soundbites on Tuesday was a bit grating. I wouldn't call it nails on a chalkboard exactly, but it wasn't Mozart either.
Market participants hoping for something meaningful out of Jerome Powell were disappointed. Or at least this market participant was disappointed.
Powell took part in a panel discussion with his Canadian counterpart Tiff Macklem for this week's IMF festivities in Washington. It was a maddeningly rambling affair replete with schmaltzy anecdotes aime
SEP tells us the FOMC is willing to – indeed, expects to – wait until 2026 to see 2% inflation, so not surprising three months of poor data isn’t going to push FOMC to tighten more (by deed or word) and potentially sink housing starts/prices, maybe some banks, maybe an uncertain number of unregulated and opaque non-banks, and the lower-income consumer.
Please be kind to our good friends north of us. They have gone to bed for over 70 years knowing the next war could be launched from Russia or China and they would be on the front lines before us. Their economy and thus their livelihoods are wholly dependent on decisions made in D.C. However they also know they have less influence than we have.
They are the next thing to family for all practical purposes.
Almost all of my Canadian readers have been with me since the very beginning of the site. They know I’m just kidding. I love Canada. That’s kind of the whole point: What’s not to like?
I just read a Bloomberg article that some heretics are espousing that Fed rate hikes have become fuel for the booming economic fire, Kevin Muir among them. I think it would make a very interesting article to hear your thoughts on this, Mr. H. I fully trust that if you think there’s nothing there to report back on, you won’t.
Happy to oblige: https://heisenbergreport.com/2024/04/17/the-radical-economic-theory-taking-markets-by-storm/
We Canadians have long been thought of as rodents; normally the industrious beaver. I like to learn something from your articles every day – and being a gerbil is a new one. By the way, gerbils can be house-trained. Not all species can.
Great comment about the Fed and tautologies.
If market participants have, speaking in general terms, become addicted to the Fed’s easy policies over the past 15 years or so, then Powell is currently an enabler. He’s already wandering in the land of “denial,” which is not a river in Egypt.
What explains Powell’s motivation for appearing to be so obtuse about the Fed’s financial conditions gauge and similar indices? That’s a rhetorical question. He’s not dumb so that’s not a reasonable answer. There are only a couple reasonable and related explanations, both of which stem from not wanting to upset the equity (and perhaps bond) markets. He wants to maintain his good reputation and enjoy the good feeling he’s experienced in the past from stable and rising equity markets and/or he’s trying to do Janet Yellin’s bidding.