Whether the Fed’s current chairman, Powell, or Fed’s director, Brainard, is heading the Federal Reserve Board (FRB) as of February next year, financial authorities have been in a pinch. There is a risk that it has been done.
The US Consumer Price Index (CPI) in October, which has risen sharply since 1990 compared to the same month of the previous year, and the household budget, which was the highest level in eight years.Expected inflation has also shaken confidence in financial officials who expected inflation to slow in the coming months.
Against this background, monetary policy is being signaled to accelerate the pace of tapering of bond purchases, and economic forecasts are updated to suggest a more aggressive rate hike cycle than previous forecasts. Authorities may be forced to make an early shift to tightening monetary policy in December.
However, the challenge for 2022 will be whether to lift the de facto zero interest rate policy and when to raise interest rates from near zero. Economists at Goldman Sachs Group and JPMorgan Chase have withdrawn their outlook for US interest rates to remain unchanged until 2011, and the market has already factored in the possibility that interest rate hikes will begin in July 2010.
Complicating monetary policy decisions and confronting communication challenges is the monetary policy review that the authorities launched in 20 years. Chair Powell and Director Brainard, along with other officials, agreed that it was “appropriate” to keep interest rates at ultra-low levels until maximum employment was achieved, and “widely subsumed maximum employment.” Goal “redefined.
At the time, monetary officials were criticized for not anticipating the ongoing rise in inflation, which is now in a difficult situation and lagging behind in controlling inflation.
Retreating from its commitment to widespread employment expansion raises questions about what the financial authorities are trying to achieve, as well as opposition from Democratic progressives who are critical of the authorities’ stance of prioritizing price stability. Will invite you. On the other hand, allowing continued high inflation would mean a further significant rate hike in the future, which could ruin the employment outcomes of pushing the unemployment rate below 5%.
“The current challenge for financial authorities will be to curb inflation and the risk of it becoming established before achieving widespread and inclusive full employment,” said Diane Swonk, chief economist at Grant Thornton. Pointed out. Last year’s review of the policy framework “has slow economic growth in mind, and the sharp turn in the economy was unexpected.”
The immediate concern is who will be the Fed chair in February next year. President Biden is expected to decide whether to continue Chairman Powell or appoint Mr. Brainard as the next chairman before Thanksgiving on the 25th.
Both Powell and Brainard are involved in the formulation of new monetary policy strategies and will be responsible for how to negotiate policy management no matter who becomes the next chair.
Powell or Brainard Will Struggle to Align Hikes With Hiring Goal（抜粋）