Powell Can’t Ignore the Elephant in the Room Forever

For all the importance of China’s subpar recovery, the country's woes are notably absent from the plethora of projections and commentary that flow from the Federal Reserve these days. Judging from recent remarks, there's either no problem or nothing sufficiently grave to prod Chair Jay Powell to hint at switching gears. Give it time.

Such an enormous cog in the world’s commercial and financial ecosystem doesn’t stumble without the pain being spread around. The Fed's mandates for price stability and maximum employment come from Congress, the most parochial of institutions. This hasn't prevented the central bank acknowledging deteriorating conditions abroad and, in some circumstances, pivoting to an easier stance or foregoing hawkish measures. That's been the case on several notable occasions in the past quarter century: the Asian financial crisis, the Russian default that soon followed, Europe’s debt crisis — and Beijing’s poorly-handled currency devaluation in 2015.