Fed’s Powell dials up the hawkish

ZH reporting on a chat with Fed chair Jay Powell this morning.  In my view, the Fed has to break oil before it can pivot.

Speaking on MarketPlace Radio this evening, Powell said the central bank has both the tools and resolve to bring down rapid inflation — though he acknowledged that the path to lower price increases could be a painful one.

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It seems Powell really does want to control inflation by crashing stocks… and if you doubt it, read on:

Ryssdal: I need you to roll with me on this last one. We’ve got a little game we play on the show. It’s called “What is Jay Powell thinking in five words or less?” And I ask our Friday afternoon panelists when we have a big monetary policy topic come up, I say, “OK, what is Jay Powell thinking in five words or less?” And I would not be able to forgive myself if, sitting across from Jay Powell, I don’t ask Jay Powell what Jay Powell is thinking in five words or less. I should tell you I did this with Obama and he blew it. He went on for like a minute. So, no pressure.

Powell: Five words or less. I’m gonna go with what I really am thinking is, “get inflation back under control.”

Ryssdal: Oh, man. Boom.

“Boom” indeed!

And then Powell turned it up to ’11’ by conjuring Volcker…

RyssdalYou talked a little bit about Paul Volcker at the last meeting, and you’ve talked about him before. You said you knew him a little bit, but the thing that really struck you about him was that he always did what he saw to be the right thing, in arguably more difficult economic times than you have right now. My question is: How sure are you that what you are doing now is the right thing?

Powell: Yeah. So that’s a good point. I do admire Paul Volcker. I think everyone admires Paul Volcker now. So I’m not to be singled out in any way for admiring him, you know. He was a truly great public servant and person. And the point was that he did what he thought the right thing was, and he was prepared to be unpopular for that, because he was looking at the medium and longer term, well, for the country. And I don’t have any, you know, I think that’s a good thing to keep in mind as you do public service jobs, is don’t think about what’s popular, do what you think is right and let everything else take care of itself. I take it as a general principle. It doesn’t provide any, it doesn’t shed any light on the current situation. We have to make an assessment of what the right thing to do is in the current situation. We know that what Paul Volcker did was right in his situation, and it’s something like that might turn out to be right here. But I don’t think we know that. I think we have a lot to learn about what the path ahead looks like.

We are pretty sure that no one is “pricing-in’ a Volcker-esque move in rates (or The Fed being able to bear the concomitant equity market carnage).

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