Former Congressional Budget Office Director Douglas Holtz-Eakin argues the 'most important thing' about Powell's speech was that he didn't ensure inflation's soft landing.
was that the mistake that was made in the ‘60s and ’70s was to declare victory prematurely, and then inflation came back with even greater ferocity. He has promised not to let that happen. So get ready for the Fed to finish this job, and meanwhile, keep track of how businesses are doing. What's the investment spending outlook look like? That's typically where you see the slowdown that leads to a recession.
The"most important thing" about Fed Chair Jerome Powell's Jackson Hole speech was that he didn't ensure inflation's soft landing, former CBO Director Douglas Holtz-Eakin said on"Mornings with Maria" Monday, Aug. 29, 2022. I think he was quite clear at the beginning of this cycle that it would take years, not months, to control inflation. And so, one can look to another two years, perhaps, of the Fed holding a restrictive policy. And remember, the Fed doesn't think they're restricting it. They haven't gotten to neutral. We have negative real interest rates. And I think the most important thing about that speech was what Jerome Powell didn't say. He didn't say we can engineer a soft landing.
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