Don’t Think About Pink Elephants or Tighter Monetary Policy
Federal Reserve Chief Jerome Powell says it’s too soon to raise rates or reduce bond-buying
“There really aren’t any hawks left on the FOMC,” only doves of different degrees, JPMorgan Chase & Co. Chief U.S. Economist Michael Feroli wrote to clients on Jan. 14, referring to the Federal Reserve’s Federal Open Market Committee. “Monetary accommodation” today is “far greater” than in past decades when the unemployment rate was as low as it is now—6.7% in December—Jim Paulsen, chief investment strategist of the Leuthold Group, wrote Jan. 14.
They’re right. It is pretty remarkable that the Fed—which traditionally sees itself as a guardian of sound money—is acting so dovish. Doves, of course, favor low interest rates to reduce unemployment. Hawks favor high rates to reduce inflation.