Powell has already ushered in a back door QE program. Therefore, he ought to quit comparing himself to his hero, former Fed Chair Paul Volcker. The comparison is laughable. Volcker would not have run a QE program, much less one that ran to the tune of $120 billion per month – pandemic or not. The difference between the two men is a matter of principle. Powell believes that Government is the solution to every problem whether it’s economic, health-related (COVID) or social. Volcker on the other hand, like Reagan, knew that Government was the problem. So, when Back Door Jerome talks tough about rates, let’s see how tough he is next year when the Bidenistas come calling. Powell is no John Wayne.
I realize that Fed Chair Powell said it will be a couple of years before the Fed eases rates. I would be thrilled if the Fed maintained a tight policy stance, although I would prefer more focus on QT and less effort on the Fed Funds Rate (related article HERE).
Powell will face immense pressure to ease next year – an Election year – from the Bidenistas. Further, China has stimulus plans and our military will pressure the Administration to keep pace – regardless of what may be baked into whatever disaster of an omnibus spending bill that looms ahead.
Fed Chair Powell has already eased monetary policy via the Fed’s recent bank bailout known as the Bank Term Funding Program – which amounts to a back door QE program. The Fed has been in QE mode since March 2023.