"One thing that has served and served the committee well is always taking a fresh look at what's going on," said John C. Williams, President of the New York Federal Reserve and Vice President. of the Federal Bank. Open Market Committee. "Do not be fooled by" We said that in September "or" We said it in November ", but really to say," What seems to be fair to us? "It's focused on:" Let's do things right, then do our best to explain it, in terms of why we changed our views. & # 39; "
Mr. Powell's difficulties increased for much of last year, as the economy skyrocketed with Trump's tax cuts, increased government spending, and business confidence. The unemployment rate fell below 4% – levels approaching the last five decades – wages began to climb and economic growth was heading towards 3%.
The Fed, convinced that the economy could bear higher borrowing costs, raised its rates three times. But in the weeks leading up to the Fed's final meeting in 2018, worrying signs began to appear, suggesting that the Chinese economy and the global economy as a whole were slowing. A key indicator based on bond prices was flashing warnings of a possible recession. Yet the Fed raised rates a fourth time at this December meeting, a decision that even some Democratic economists have deemed unnecessary.
Powell has been trying to get what the Fed is calling an "accommodative hike," a hike in rates, while signaling to the markets that the end of these increases was in sight. But in the Fed's forecasts released that day, it appeared that officials had forecast two rate increases in 2019.
Markets, already frightened, plunged at a press conference after the meeting, as investors interpreted Powell's remarks as suggesting that further rate hikes would be coming soon, even though the economy was slowing. What was perhaps the most worrying for investors was perhaps his suggestion that another tool deployed to dispel any stimulation of the economy, namely the narrowing of its gigantic bond portfolio. , would be kept on the "autopilot".
In the days that followed, Mr. Trump and his allies called on Mr. Powell to resign or be fired.
"If only the Fed relaxes a bit to not have a recession," said in a December radio interview in December Mr. Moore, the conservative economic commentator that Mr. Trump intends to appoint to the board of directors. Administration of the Fed. He argued that the president could dismiss Powell for "cause," saying the Fed chairman "was destroying our economy."
Mr. Powell spent his vacation in a family reunion in South Florida, watching financial market fluctuations, negative news about businesses and uncertain economic data – and devised a way to correct mistakes . He scratched bullet points on a notebook and waited for an opportunity to pivot publicly.