Prices have been on a steady downtrend since mid-2022, and despite high interest rates, the labor market and consumer spending has remained fairly robust. However, some commentators say it's still possible the economy may not tip into a recession, and that the Fed ultimately has made the right policy moves over the last year. The result of Powell's botched job, critics say, is that the Fed will steer the US economy into a so-called "hard landing," or a deeper recession that would have been the case if Powell was on the ball sooner when it came to inflation. Is a "soft landing" of the economy still possible? Federal Reserve in Washington, U.S., November 28, 2017. Jerome Powell testifies before the Senate Banking, Housing and Urban Affairs Committee on his nomination to become chairman of the U.S. "Jay doesn't promote himself like so many do in Washington. "I never saw him lose his temper," former Dallas Fed President Richard Fisher told the Washington Post. Other colleagues say his calm demeanor is fitting for someone in the driver's seat of the economy - especially in the face of the current storm of macro conditions. "He tells you pretty much what he's going to do, and then he explains it afterwards. Unlike previous central bank chiefs, Powell doesn't communicate in "Fedspeak," Rubenstein said, as his comments are generally jargon-free and can be easily understood by the general public. Powell's done a pretty good job," billionaire Carlyle co-founder David Rubenstein said in a recent interview with CNBC, pointing to the Fed's review of economic data when making policy decisions and Powell's transparency with markets. With so many economists, academics, and politicians lobbing criticisms at the central bank chief, it can be hard to find a commentator out there who's got a kind word for the job Powell has been doing.Ī few, however, say that he's doing the best he can given the unprecedented circumstances. "The hope is we don't get a big economic accident." Does Powell have his defenders? To me, this doesn't come as a surprise at all," he said.
And we do, we've gotten financial accidents. "Do we expect accidents when someone drives like that? Yes. In a recent interview, El-Erian compared the Fed's monetary policy to driving in fog at maximum speed, and then suddenly slamming on the brakes.
One big critic has been top economist Mohamed El-Erian. Not far enough and inflation becomes entrenched. Raise rates too fast and too far, and recession is almost guaranteed. Now the Fed is faced with a dilemma critics say is one of its own making. Inflation would go on to notch a 41-year-high in the middle of last year, and Powell himself admits that prices still remain " much too high." When inflation began to rise in 2021 - partly from the effects of the Fed's monetary easing during the pandemic - messaging from Powell and the Fed was that rising prices were a "transitory" phenomenon, a description the Fed would be forced to abandon as it confronted the painful reality that prices weren't coming back down.
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