Powell’s Progress
“The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence,” the Fed Chair said on a moderated panel at Washington’s Wilson Center.
He might be understating it here, but overall he’s in the ballpark.
Now hold on. “Lack of further progress”? Last week’s inflation data suggested that Bidenflation is not just stagnant; it’s actually resurgent. This particular turn of phrase is like declaring that there has been a “lack of forward progress on my fitness goals” just after I ate an entire birthday cake.
One person who understands this phenomenon is Black Rock’s Larry Fink, who said on Friday that the Fed’s two percent inflation target is way out of reach and that massive spending projects are largely to blame.
“We have restructured how we frame our economic policy. We have a trillion dollars of fiscal stimulus in the CHIPS Act, the infrastructure act, and the [Inflation Reduction Act]. We have very poor legal immigration policies that have restricted, and that is all inflationary in jobs,” the WEF board member stated.
(If you are keeping score at home, it is Joe Biden and the Democrats who are to blame for all of it.)
“As Long as Needed”
Back to Powell on Tuesday. “If higher inflation does persist,” he said, “we can maintain the current level of [interest rates] for as long as needed.”
“As long as needed.”
That is quite declarative.
Yet, here we are today.
Clearly, he has seen the light, or, more likely the data, which shows increasing inflation and other macroeconomic numbers that indicate a politically neutral Fed has no business cutting rates now, and is probably looking at mid to late summer as the first possible opportunity to do so.
Being that this is the Breitbart Business Digest, we will state the obvious that all elements of the political and bureaucratic establishment in Washington would prefer to see Joe Biden beat Donald Trump in the November elections, and it will be easier for Joe to win if rates come down. So, look for politicians and media talking heads to try to devise some rationale to try to get the Fed slashing.
It will be interesting to see what talking points they latch onto, considering that evidence that cuts are the right move, right now, is nonexistent.
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