The Fed Sure Sounds as If It Expects a Recession
The central bank chief’s confidence that the economy can avoid a downturn has taken a beating in just more than a week.
From "strong economy" to "factors that we don't control."
Photographer: Win McNamee/Getty Images
Well, that was quick. In just more than a week, US Federal Reserve Chair Jerome Powell has gone from expressing confidence that policy makers will be able to avoid pushing the economy into a recession while rapidly raising interest rates to control inflation to remarking, as he did on Thursday, that a downturn is out of the central bank’s control.
At a press conference on May 4, after the Fed raised its target rate for overnight loans between banks by half a percentage point in the biggest increase since 2000, Powell told reporters that “it’s a strong economy” and nothing suggests “it’s close to or vulnerable to a recession.” Contrast that with comments he made Thursday in an interview with Marketplace public radio, where he said, “The question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.” The factors Powell cited included geopolitical events (the war in Ukraine) and supply chain bottlenecks (China’s Covid-19 lockdowns).