Powell may have a hard time avoiding Trump’s ‘Too Late’ label even as Fed chief does the right thing

The story suggests that the new nickname “Too Late” by President Donald Trump for the president of the Federal Reserve, Jerome Powell, has a great possibility of becoming a reality, although he would barely be alone if he does.

After all, the leaders of the Central Bank have a long history of being too reluctant to increase or reduce interest rates.

Whether Arthur Burns kept the rates that are too low in the face of the duration of the stagflation threat of the 1970s, Alan Greenspan did not respond quickly enough to Dotcom’s bubble in the 90s, or Bennanke’s dismissal for Bennanke’s dismissal of the sub -pre -pre -housing housing of the house in the house.

Then, some economists think that Powell, in front of a unique set of challenges for the twin objectives of the Fed of full employment and low inflation, has a great possibility of using the label “too late.”

In fact, many of them think that nothing is exactly what Powell shoulder do now.

“Historically, I return and look at any Federal Reserve, and I will return to the 70s, the Fed is always late in both directions,” said Dan North, a senior economist of Allianz Trade North America. “They tend to wait. They want to make sure they don’t make a mistake, and for when they do, it is generally too late. The economy is almost always in recession.”

However, he said that given the mixture of volatile policies, with Trump tariffs that threaten both growth and inflation, Powell has few more options than sitting in absence more clarity.

Powell is in a situation of not winning, with threats on both sides of the Fed mandate “and that is why he is doing the right time, which is nothing, because in one way or another it will be a mistake,” said North.

Trump wants a cut

He thought Trump said the probable economy will be a good matter what the Fed does, has been preventing the late rates of the Central Bank, insisting that inflation has been killed.

In a social publication of the truth after the Fed decision this week of keeping the rates unchanged, Trump declared that Jerome Powell “too late” is a fool, that he has no idea. “The president declared that there is no” virtualy non -inflation “, something that was true for March at least when the Fed preferred inflation meter did not change during the month.

However, the president’s tariffs have not yet felt in the real economy, since they are barely one month.

Recently, economic data does not indicate price peaks or a perceptible deceleration in economic activity. However, the surveys are showing concerns with the manufacturing and service sectors, while the feeling of the consumer has been grated, and almost 90% of the S&P 500 partners mentioned Conns of rates in their quarterly gain calls.

At the press conference after this week’s meeting, Powell, Powell repeatedly expressed confidence in what he called a “solid” economy and a labor market “consisting of the maximum employment.”

No ‘preventive’ cuts

The 72 -year -old Fed president also dismissed any idea of ​​a preventive rate cut, despite what the feelings survey data indicate about current conditions.

“Powell offered two reasons to not be in a hurry. The first one,” there is no real cost to wait, “is one of those who can live to regret,” said Krishna Guha, director of global policy and Central Bank strategy at Evercore Isi, in a client’s note. “The second -” We are not sure what the right thing will be ” – makes more sense.”

Powell has his own particular history of being late, with the Fed reluctant to walk when inflation began to increase by 2021. He and his colleagues tagged that “transitory” episode, a call that persecuted them again when they had to institute a series of historically aggressive walks that have not yet brought inflation to the objective of 2% of the central bank.

“If you are waiting for the labor market to confirm if they should qualify, by definition, they are too late,” said Joseph Lavorgna, SMBC chief economist Nikko Securities and Trump’s Senior Economic Advisor in his first mandate. “I don’t think the Fed is prospective enough.”

In fact, if the Fed is using the labor market as a guide, it is almost certain that it will be the curve. An old adage in Wall Street says: “The labor market is the last to know” when a recession is approaching, and the story has been quite consistent that job losses generally do not begin until after a recession has begun.

Lavorgna believes that the Fed is hindered by its own history and is also called, since policy formulators try the impact of tariffs.

“We are not going to know if it’s too late, it’s too late,” he said. “The economic history combined with current market prices suggests that there is a real risk that Fed is too late.”