Powell’s remarks yesterday on the FOMC’s anticipated decision to raise rates by 25 basis points speaks to sticky inflation and the Fed’s willingness to continue raising, even in the face of regional bank failures.
“We on the committee have a view that inflation is going to come down not so quickly”
Jerome Powell
For all the negative discourse that permeates the Twittersphere on Powell and the Fed, I actually respect the fact he has learnt his lesson from 2015 and remains steadfast in his mission to curb inflation.
So far it has worked. Slowly.
Most commentators seem to miss the fact that the regional banks that are failing decided to take on massive interest rate risk at a time when rates were near zero.
Short-sighted management of banks are to blame for this current round of failures; it was infantile to presume that interest rates would remain at zero ad infinitum.
And Powell is clear on where we go from here:
“Inflation has moderated somewhat since the middle of last year, nonetheless inflation pressures continue to run high and the process of getting inflation back down to 2% has a long way to go.”
Jerome Powell