I guess we'll find out in a few hours, eh? Not sure how Powell can do anything to help the real economy anyway. His tools are limited, and the limited tools he has are likely to get him fired if it means doing anything negative to asset prices. The whole reason he has a job is because Yellen was like, "1% interest is low enough in a strong economy" or some shit, wouldn't kowtow to Toddler-in-chief's temper tantrums.Can you imagine Fed Chairman Jerome Powell raising interest rates to 3%?
But why is that different that the last dozen years? Everyone had been predicting inflation some QE started and it never materializes outside the stock market. At some point the inflation predictions are going to be true in the same way that at some point earthquake predictions are going to be true, but that doesn't mean the predictions were "correct". I'm missing something here and I don't know what it is.
The difference is the argument used to be "we'll raise rates if we see inflation" but is now "we'll never raise rates." I think it's worth pointing out that less than a year ago we ran into a crisis whereby the banks gave no fucks what the overnight rate was. As a consequence, the Fed underbid every bank and swelled their balance sheet. 'member that? It looked concerning. Good times. I think, fundamentally, this is the Fed saying "we give no fucks about inflation, it is no longer our problem" because they're about to lose control and the market will be vaguely less spooked if they can say "no we meant to do that." After all, we're less than a year out from the day the banks decided they didn't give a fuck what the overnight rate was. At which point you begin to question what the point of the Fed even is: their charter is to provide stability within the banking system and they're arguing here that stability is overrated.
