Powell without the courage to stand against political pressure. Someone needs to tell the FOMC the "commitment" to a 2% mandate lacks any credibility when inflation has been above it for 52m and the Fed signals rate cuts as inflation rises and the economy is at full employment.
I agree and wonder why this by now is a contrarian view. It’s pretty straightforward and well explained in your Jackson Hole preview. The 10 year yield is down post speech however, suggesting credibility is still there - no? Doesn’t mean it will last of course - credibility or lower long yields.
Facts
Is the economy really at full employment?
I love an optimist.
It feels like Game of thrones. we do know what happens next, 1. job numbers for August will be glorious (otherwise Trump will keep firing people at BLS), 2. PCE may very likely come in hot next week, 3. CPI/PPI most likely hot. To cut or not to cut?
Powell will sit at beach, watch everything burn down in a year, I won’t blame him, because he’s no longer in control rn, why worry about people blaming him? At his age, it’s just not worth the trouble. Life is filled with wonderful things, he’s ready to retire, that’s what I get from today’s speech.
Apparently they have completely forgot the cost it brings to a society when business and people cannot trust/count on price stability any longer. Around 2% as goal in US and Europe is not something central bankers just came up with after to much wine in Jackson Hole.
From 2019 to August 2020 Fed did the "Average Inflation Targeting" ATI rule change. Essentially, let inflation run moderately higher to make up for the deacde before that ran less than 2%. It immediately blew up on them as they were asleep at the wheel when pandemic inflation took off.
Maligned as they were & despite comments by the Fed Chair that the 2% CPI target is not changing...they never rescinded the rule change. What we're witnessing is the new normal, any blip in unemployment, they'll left inflation run hot (but not too hot?) via the ATI rule. Goalposts are moving.