Powell Tightens And Rests Until September, Biden Loosens And Gears Up For November

They came, they met, they gave speeches and today are headed home from their central bankers’ conclave in Jackson Hole, Wyoming. They shared the latest reading from their models, crystal balls or chicken intestines. Leading the parade was Jerome Powell, chairman of the US Federal Reserve Board of Governors. Last year he declared that the 5.3 per cent inflation rate was “likely to prove temporary”; that there was “slack” in the labor market and “little evidence of wage increases that might threaten excessive inflation;” and that “global disinflationary forces … will continue to weigh on inflation.” He maintained negative real interest rates even as consumer inflation was rising at a rate of 8 per cent.

The chairman did not pluck these bits of unwisdom from thin air. They were based, in part at least, on the advice of the 400 Ph.D. economists on the Fed staff, pulling down salaries that average in excess of $200,000 per annum. With a fringe benefit of never having to say I’m sorry.