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 onfactors 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).