I dont think it would have mattered.

I dont think it would have mattered.
by DBCooper (2024-02-27 10:55:30)
Edited on 2024-02-27 10:58:45

In reply to: Biden renominated Powell. posted by EricCartman

No one was going to raise rates as fast as we probably needed right away and if we did that might have forced a recession. And once Powell got going he raised them quite quickly. We got to 4.5% by end of 2022 and after onyl starting in March of that year, and once the markets saw the Fed meant business you started to see inflation come down (obviously the supply chain issues slowly getting fixed and fear of Russia vs Ukraine waning helped too). If we started a few months earlier, say in the summer of 2021, I doubt it would have mattered that much in the grand scheme of things. No one would have raised rates 300 bps in 6 months with CPI in the 4s and 5s. They would have started slowly and that never would have been enough to restrict the oncoming inflation surge. Plenty of people were predicting future inflation, but no one was suggesting 7-9%. I agree Powell was slow to raise and stupidly wanted to wait until the bond purchasing was over before raising, but going from 0- to say 1% rate by March of 2022 would not have done much, IMO. It probably would only had meant that they would not raise 75bps 3 times in a row.

I think Powell has done a pretty good job if he is able to soft land this thing and possibly avoid a recession. At the very least he certainly pushed it down the road months to even years past when every economist on the planet predicted it was going to happen.