Jerome Powell, Chairman of the US Federal Reserve, speaks during a press conference after a two-day meeting of the Federal Open Market Committee for interest policies in Washington, DC, USA, May 7, 2025.
Kevin Lamarque | Reuters
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 exactly what Powell 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 that the economy will probably be fine, no matter what the Fed does, he has recently put a strain on the central bank against the reduction of interest and insists that inflation has been killed.
In a social contribution of the truth 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 the case at least for March when the preferred inflation radiation of the FED occurred unchanged for the month.
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 in both production and service sectors, while consumer mood is actressed and almost 90% of the S&P 500 companies mentioned tariff concerns regarding their quarterly calls for profit.
At the post-meeting press conference this week, however, Powell repeated confidence in a “solid” economy and a labor market “that matches 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.”
