Powell vs. Greenspan: Who's Right? "Hands-Off" Or "Hands-On"

Powell vs. Greenspan: Who's Right? "Hands-Off" Or "Hands-On" Policy To Confront Cyclical Inflation


by Tyler Durden
Submitted by Joseph Carson, former chief economist at Alliance Bernstein
Federal Reserve Chair Jerome Powell in 2021 faces a similar challenge that former Fed Chair Alan Greenspan faced in 1994. Fast growth as the economy re-opened triggered substantial cyclical inflation pressures, somewhat similar to 1994 when headwinds from tight credit and balance sheets strains faded. Yet, Powell's policy response to the inflation challenges has been markedly different than Greenspan's.
Powell has employed a "hands-off" approach, maintaining the overly accommodative monetary policy stance, thinking the inflation surge will prove to be temporary. The inflation results for all of 2021 are not in, but consumer price inflation in the first six months (3.6%) exceeded what occurred in the twelve months of 1994 (2.6%).

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