The Powell Pause

The Fed has been the arsonist and the firefighter. They were too slow to react to high inflation and then they reacted by hiking rates with reckless abandon.

What is Know The Difference Minute?

Hot topics, fresh stories and useful formation; all in 60 seconds

The Powell Pause
Welcome to the Know the Difference Minute for Thursday, October 19th.
Federal Reserve Chair Powell spoke today. Of course, everyone listened. The key phrase he used was something he has said a few times. The Fed can now proceed carefully. That’s a nice change from last year when it was proceeding recklessly.
As Dave Spano, our CEO has said, the Fed has been the arsonist and the firefighter. They were too slow to react to high inflation and then they reacted by hiking rates with reckless abandon.
But, that was then and this is now. Now Powell said that persistently above-trend growth or a labor market that is no longer easing could push them to hike again, but my sense is that he wants a nice long Powell Pause on hikes.
The Fed is moving from an operating procedure of moving fast and breaking things to one of caution.
I’m Brian Jacobsen, Chief Economist at Annex Wealth Management. That is your Know the Difference Minute.