Powell’s Eight Years Marked by Pandemic Response, Fed Independence

Source

Korea Economic Daily

Summary

Federal Reserve Chair Jerome Powell will step down on May 15 after eight years in the post.
The Powell era was defined by Covid-19, interest-rate policy and central-bank independence.
After cutting interest rates to near zero and expanding liquidity support in March 2020, the Fed delayed rate hikes in 2021, helping push U.S. inflation to 9.1%% in June 2022.

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Jerome Powell will step down as chair of the Federal Reserve on May 15, ending an eight-year tenure.

Two themes defined the Powell era: the Covid-19 pandemic and central-bank independence. During President Donald Trump’s first term, Trump complained that Powell, whom he had nominated, was not cutting interest rates. Powell kept rates high.

The sudden onset of Covid-19 was the biggest crisis of Powell’s tenure. As the pandemic intensified in March 2020, the Fed quickly cut rates to near zero and sharply expanded liquidity support. But when inflation began to rise in 2021, the central bank judged it to be “transitory” and made the mistake of waiting too long to raise rates. By June 2022, U.S. inflation had surged to 9.1%.

In Trump’s second term, Powell took on the image of a defender of central-bank independence.

Lee Sang-eun, Washington correspondent selee@hankyung.com