Federal Reserve Chairman Jerome Powell says central banksneed to become more aggressive to successfully curb decades of high inflation. According to the renowned economist, formerly known as “Dr.
Henry Kaufman, who famously worked for Solomon Brothers during the 1970s inflation crisis, said that with inflation hovering at his 8.5%, Powell was cautious about his Fed leadership. claimed to be too much.
"I'm still waiting for him to act boldly. 'Bold' means he has to shock the market," Kaufman said. said in an interview with The Financial Times. "If you want to change someone's view, or change someone's behavior, you have to punch them in the face, not slap their hands."
Kaufman offered critical views even after the Fed submitted its first three documents. It has risen by a quarter percentage point for the second consecutive time and is about to pull the price down. Similar rate hikes are expected to continue at least through the end of the year.
But "Dr. Doom" said the Fed's policy under Powell was still "somewhat lagging" in its inflation battle. That contrasts with former Fed Chairman Paul Volcker, who Kaufman said was “ahead of the curve” when he aggressively raised interest rates to deal with skyrocketing inflation in the 1970s.
Kaufman said the Fed's first interest rate hike last March came months after Powell first noted the US economy's "persistent high inflation." It pointed out.
"His prediction was correct, but his inaction was wrong," added Kaufman.
Investors expressed optimism earlier this month after July's better-than-expected consumer price index eased inflation slightly .
Currently, the market is poised to raise rates by 0.5% at his next Fed meeting in September, with a 52.5% chance and a 47.5% chance for another 4, according to CME Group data. A three-fold rate hike is factored in.
Kaufmann isn't the only economist with a 'Ph.D.' A nickname for "fate" after making dire predictions.
Nouriel Roubini, CEO of Roubini Macro Associates and former economic adviser to the Clinton administration, is known by the same nickname. He is known as one of the most prominent analysts to accurately predict the looming housing market crash before the Great Recession.
Earlier this week, Mr. Roubini told Bloomberg that a sharp rate hike by the Federal Reserve or sustained high inflation would lead to a "hard landing" for the US economy.
"To push inflation to 2%, the Federal Funds rate needs to be well above 4%. My view is 4.5% to 5%," Roubini said.told Bloomberg on Monday. "If that doesn't happen, inflation expectations will be entrenched."
hard landing," added Roubini. ``Either way, it's going to be a hard landing or inflation will get out of control.''
Roubini also said the Fed could slow down or even cut rates next year. He called the optimism "delusional."
