Powell may be hard to avoid Trump’s “too late” label, even if the Fed leader does the right thing

History shows that President Donald Trump’s new “too late” nickname for Fed Chairman Jerome Powell has a great chance of achieving, although he would hardly be alone if he did.

After all, central bank leaders have a long history because they are reluctant to raise or lower interest rates.

Facing the threat of stagnation in the 1970s, whether Arthur Burns made Alan Greenspan not respond quickly enough to the Point Com bubble of the 90s, or Ben Bernanke dismissed the “inclusion” of secondary housing prices rather than lowered criticism from financial leaders in 2008, otherwise approved some criticism rather than lowered criticism from some, Alan Greenspan not responded quickly enough to the Dotcom bubble, or Ben Bernanke dismissed secondary housing prices rather than lowered some of the slowdowns.

Therefore, some economists believe that Powell faces a unique challenge to the dual goals of full employment and low inflation for the Fed, and they are likely to wear the label “too late”.

In fact, many of them think nothing is Powell should Do it now.

“Historically, going back to see any Fed, I’m going back to the 70s, the Fed is always two-way late,” said Dan North, senior economist at Allianz Trade North America. “They tend to wait. They want to wait to make sure they don’t make mistakes, and by the time they do it, it’s usually too late. The economy is almost always in a recession.”

But, he said, given that Trump’s tariffs threaten growth and inflation, Powell had no choice but to sit more clearly, and Powell had no choice.

Powell is in a winless state and threatens both sides of the Fed’s mission, “That’s why he’s doing the right thing right now, and that’s nothing because one way or the other will be a mistake,” North said.

Trump wants to cut

Even though Trump says the economy It might be fine Whatever the Fed does, he has been hudging into the central bank to lower interest rates lately and insists that inflation has been killed.

exist Truth Society Position After the Fed decided to keep interest rates unchanged this week, Trump declared that “it’s too late, Jerome Powell is a fool, he has no clues.” The president declared “little no inflation”, at least when the Fed’s preferred inflation meter remains unchanged, which is in March.

However, the president’s tariffs have not been felt in the real economy, as they are only one month old.

Recent economic data do not indicate a peak in price or a perceived slowdown in economic activity. However, the survey shows Increased concerns In the manufacturing and services sectors, Consumer sentiment worsensand nearly 90% of S&P 500 companies mentioned tariff concerns about their quarterly earnings calls.

exist Post-conference press conference this weekHowever, Powell repeatedly expressed confidence in what he called a “solid” economy and labor market “aligned with the greatest employment.”

No “pre-emptive” cuts

The 72-year-old Fed chairman also dismissed any idea of ​​lowering the first-mover rate, although the Emotional Survey data suggests the current situation.

“Powell offers two reasons not to hurry. The first one – ‘real waiting costs – is something he might regret,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a client’s note. “The second – ‘We’re not sure what the right thing will be – makes more sense.”

Powell has his own special history of being late, and the Fed is reluctant to hike when inflation starts to rise in 2021. He and his colleagues tagged the episode “temporality” and they returned when they had to propose a series of historically aggressive hikes that had not yet restored the central bank’s 2% target to the central bank’s 2% target.

“If they’re waiting for the labor market to confirm whether interest rates should be lowered, it’s too late,” said Joseph Lavorgna, chief economist at SMBC Nikko Securities and senior economic adviser to Trump. “I don’t think the Fed looks enough.”

Indeed, if the Fed takes the labor market as a guide, it will almost certainly lag behind the curve. An old saying on Wall Street says: “The labor market is the last one to know”, and the recession comes, history is quite consistent, that is, employment losses usually do not begin until after the recession begins.

Lavorgna believes the Fed has been hampered by its own history and will miss the call as policymakers fail to successfully try to eliminate the impact of tariffs.

“We won’t know it’s too late until it’s too late,” he said. “The combination of economic history with current market pricing shows that the Fed will have real risks.”