The Fed looks for a soft landing

Can Jerome Powell bring inflation under control?

Jerome Powell
(Image credit: Eric Baradat/AFP via Getty Images)

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In his first term, the Federal Reserve's chairman, Jerome Powell, deftly navigated Donald Trump's presidency and "the onset of a global pandemic," said John Cassidy in The New Yorker. "His second term may well turn out to be an even bigger challenge." So far, many of the choices made by the central bank have been prescient. The Fed's decision, early in the pandemic, "to cut short-term interest rates to zero and pump more than a hundred billion freshly minted dollars into the bond markets every month has succeeded in getting the economy through some very dark times." Now, with inflation far above predictions, Powell has turned more hawkish, trying to avoid a spiral of increasing wages and prices. But if "Omicron proves more virulent than Delta, it could have even bigger effects on the economy," making it difficult to pull the Fed's support. Powell must perform a feat that eluded two of his predecessors, Alan Greenspan and Ben Bernanke: engineering "a soft landing for the economy without precipitating a financial crash or a recession."

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