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OPINION

Sideways: The Fed – I’m a central banker... get me out of here!

As Mario Draghi begins his victory lap before stepping down as president of the ECB in October 2019 and his colleagues get down to the serious business of competing for the succession, they will no doubt give thanks that they do not face trial by Twitter in the same way as Federal Reserve chairman Jay Powell.

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Federal Reserve chairman Jay Powell



President Trump appointed Powell to run the Federal Reserve, so the central banker cannot complain that he didn’t know what he was getting into when he took the job. It is nevertheless unlikely that Powell appreciated the full horror of trying to conduct a measured return to a policy of higher interest rates against a backdrop of aggressive public opposition to any hikes by the president. 

“It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!” Trump tweeted on December 17, the day before the last Federal Reserve policy announcement of 2018.

Powell had already risked the perception that he caved in to presidential pressure when he described rates as “just below” neutral in late November, in what was widely interpreted as a dovish comment designed to reassure traders about the likely pace of hikes – and an attempt to dampen equity market volatility.