As Jay Powell tries to reframe how the Federal Reserve will tackle the highest inflation in roughly 40 years, one of his most challenging tasks has been convincing investors of the US central bank’s commitment to doing so.
One of Jay Powell’s most challenging tasks as he tries to reframe how the Fed will deal with the highest inflation in about 40 years is to convince investors that the central bank has the determination to do so.
Having jettisoned an initially “patient” approach in favour of being “humble and nimble” about moving “steadily” towards tighter monetary policy settings, the Fed chair has embraced moving “expeditiously” towards “neutral” rates that will neither stoke demand nor constrain the economy.
The Fed chairman abandoned his initial “patient” approach to a “steady” move to tightening monetary policy “with humility and flexibility.” Today, he supports a “rapid” shift to “neutral” interest rates that neither stimulate demand nor constrain the economy.