Advertisement
Features

A too-warm welcome for new Fed chief Jerome Powell

Jerome Powell, who was sworn in as chief of America’s Federal Reserve this week, faces a baptism of fire.

882_MW_P06_Markets_Bottom
99205338

Jerome Powell, who was sworn in as chief of America's Federal Reserve this week, faces a baptism of fire. If inflation is returning, he must ensure it doesn't get out of control. Yet keeping the economic upswing going at the same time implies walking a tightrope tightening monetary policy just enough to temper price rises, but not so much that the stockmarket and economy loses confidence and a recession ensues.

Advertisement - Article continues below

In the 1970s, inflation rose too far and it took a recession to subdue it. Powell (pictured left, standing on the right) was appointed by President Donald Trump, who will be "determined to deliver economic growth ahead of November's election", as Fidelity's Tom Stevenson notes in The Daily Telegraph, so some think he may raise rates too slowly to keep growth going and avoid stockmarket jitters. To that end, he may loosen monetary policy if this sell-off turns really nasty.

But that would merely perpetuate our present dysfunction: placating nervous investors at the first sign of turbulence, and thereby blowing up damaging bubble after damaging bubble. Given the Fed's inauspicious track record, investors should hold gold to hedge against both crisis and inflation.

Advertisement
Advertisement

Recommended

How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Why Wall Street has got the US economy wrong again
Economy

Why Wall Street has got the US economy wrong again

The hiring slowdown does not signal recession for the US economy. Growth is just moving down a gear, says Brian Pellegrini.
25 Oct 2019
If companies have too much power, we need more competition, not higher taxes
US Economy

If companies have too much power, we need more competition, not higher taxes

Free-market capitalism is breaking down and that is going to lead to higher taxes down the line. John Stepek explains why that matters for investors.
11 Aug 2020
What will the US central bank do next?
US Economy

What will the US central bank do next?

As the US continues to grapple with the Covid pandemic, the Federal Reserve will meet to decide what to do next on jobs, inflation and the recovery in…
28 Jul 2020

Most Popular

Eagle Lightweight GT: the reincarnation of the E-type Jag
Toys and gadgets

Eagle Lightweight GT: the reincarnation of the E-type Jag

Jaguar’s classic E-type sports car has been reinvented for the modern age. The result – the Eagle Lightweight GT – is a thing of beauty.
7 Aug 2020
Platinum: the precious metal that looks set to play catch-up with silver and gold
Silver and other precious metals

Platinum: the precious metal that looks set to play catch-up with silver and gold

Gold and silver continue to soar, but there's still time to get in. And there's another precious metal that looks set to go on a bull run too, says Jo…
7 Aug 2020
UK house prices hit a new record high – can it last?
House prices

UK house prices hit a new record high – can it last?

Despite the pandemic, UK house prices have hit a new high. John Stepek looks at what’s driving the surge in prices, and what it means for house prices…
7 Aug 2020