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2023-02-15 Donato Masciandaro

The Fed Floats between Wall Street and the White House

The Fed claims that its goal is to end monetary tightening with a soft landing, i.e. with inflation that moderates while not paying the cost of a recession. Is this credible? No, it can only be a hope. The history of the eleven previous recessions tells us that thinking the Fed can produce a soft landing is an illusion. It is more likely that the intensity and rapidity followed by the Fed’s monetary policy will depend on politics and finance: will Powell keep his foot on the gas, as Biden wants, or slow down, as Wall Street wants?

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