Powell Doctrine Emerges as Fed Chief Debuts at Jackson Hole
- His policy strategy is marked by risk management, gradualism
- Economic models need to be backed up by reality, he says
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Jerome Powell laid out a doctrine of basing monetary policy as much on how the economy performs in reality as on the prescriptions of academic models as his Federal Reserve tries to extend a nearly decade-long expansion.
In his first speech as Fed chief at an annual conference in Jackson Hole, Wyoming, Powell defended his gradualist approach and, in the process, hardened expectations for a September interest-rate increase. In addition, he stressed that estimates of how the economy works -- like those followed by Ph.D. economists on the Fed staff -- were at best “hazy” navigational guides.