Powell Threads the Needle in Congress in a Swirl of Uncertainty
The Fed chair managed expectations deftly for markets primed to go haywire.
Fed Chair Jerome Powell avoided heaping more uncertainty into an existing cauldron of volatility.
Photographer: Win McNamee/Getty Images
Federal Reserve Chair Jerome Powell entered Wednesday’s testimony before the House Financial Services Committee facing an extremely difficult situation. An unpredictable war is unfolding in Europe, oil prices are at the highest in about a decade, and the Fed needs to prepare markets for the first rate increase since 2018 when asset prices are teetering at levels that are untenable. The worst-case outcome is, of course, stagflation — the central bankers’ nightmare in which prices run out of control as the economy sputters.
Given the backdrop, markets are signaling that Powell did as well as he could have: He avoided heaping more uncertainty into an existing cauldron of volatility.