Powell can find it difficult to avoid Trump’s “too late” label, even if Fed’s boss does the right one

The story indicates that the new “too late” nickname of President Donald Trump for the chairman of the Federal Reserve, Jerome Powell, has a strong chance to come true, although he would hardly be alone if this were the case.

After all, the central bank guides have a long history to reluctantly increase or lower interest rates.

Regardless of whether Arthur Burns in the 1970s, the threat of stagflation, Alan Greenspan did not react quickly enough to the Dotcom bladder in the 1990s, or Ben Bernanke, who advise the rejection of the oppression of oppression prices as “content” and not lowered, which reduced the rate in 2008, after 2008 Gender -specific lines must have thought.

Some economists therefore believe that Powell, who has set up with a unique challenge for the twin goals of the Fed in full employment and low inflation, has a strong chance of wearing the “too late” label.

In fact, many of them think that nothing is what Powell is should do now.

“Historically, they go back and take a look at a Federal Reserve and I return to the 1970s. The Fed is always late in both directions,” said Dan North, Senior Economist at Allianz Trade North America. “They tend to wait. They want to wait to make sure they don’t make a mistake, and if they do it, it’s usually too late. The economy is almost always in a recession.”

However, he said that Powell threatened both growth and inflation in view of the volatile mix of Trump’s tariffs, but only lacks more clarity.

Powell is in a situation without profit with threats for both sides of the Fed mandate, “and at that moment he does just the right thing, which is nothing, because it will be a mistake in one way or another,” said North.

Trump wants a cut

Although Trump said the economy It will probably be fine No matter what the Fed does, it has recently burdened the central bank to lower interest rates and insist that inflation has been killed.

In A Truth of social contribution After the Fed decision this week to keep interest rates unchanged, Trump explained that “too late” Jerome Powell is a fool who has no idea “. The president said that there was” practically no inflation “, something that was at least the case for the preferred inflation radiation of the FED for the month unchanged.

However, the president’s tariffs must still be felt in the real economy because they are barely a month old.

The latest economic data does not indicate price tips or a perceptible slowdown of economic activity. However, surveys show Increased concerns Both in the manufacturing and in the service sector, While the consumer mood was acidifiedAnd almost 90% of the S&P 500 companies mentioned tariff concerns on their quarterly profits.

At The post-meeting press conference this weekHowever, Powell repeatedly expressed confidence in a “solid” economy and a labor market, “in accordance with maximum employment”.

No “preventive” cuts

The 72-year-old FED chairman also rejected an idea of a preventive interest rate reduction, although data on the survey indicate the current conditions.

“Powell has offered two reasons not to have in a hurry. The first -” no real costs for waiting ” – is one that he can regret,” said Krishna Guha, head of global politics and central bank strategy at Evercore ISI, in a customer evidence. “The second – ‘We are not sure what will be right’ – makes more sense.”

Powell has his own history of delay, with the fed chest of hersing to hesitate from inflation by 2021.

“If you are waiting for the job market to confirm whether you should reduce interest rates, you are too late by definition,” said Joseph Lavorgna, chief economist at SMBC Nikko Securities and a high -ranking economic advisor from Trump during his first term. “I don’t think the FED looks forward to the future.”

If the Fed uses the labor market as a guide, it will almost certainly be behind the curve. An old proverb in Wall Street says: “The job market is the last to know” when a recession comes, and the story was quite consistent that work losses generally only begin after a downturn.

Lavorgna believes that the FED is enlarged according to its own story and will also miss this call because the political decision -makers unsuccessfully try to play the effects of tariffs.

“We won’t know if it is too late until it is too late,” he said. “Economic history in combination with current market prices indicates that there is a real risk that the Fed will be too late.”