The Federal Reserve is making the right moves to combat surging inflation, Goldman Sachs Group Inc. President John Waldron said, marking a turnaround from his questioning of its monetary policies earlier this year.
“You’re seeing the Fed move quite aggressively and in my opinion very appropriately to get on top of what’s significant inflation building in the economy, clearly trying to front load a lot of the moves -- policy moves -- to try to deal with inflation,” Waldron said in a Bloomberg Television interview Tuesday. “We at Goldman Sachs are impressed with what they’re doing, and we expect them to continue to be aggressive in fighting inflation, and I’d say so far, so good.”
The comments come after Waldron said in January that the independence of the Fed has been damaged in recent years and that it’s lost credibility in markets. In a virtual meeting with the New Jersey State Investment Council, he questioned the Fed’s strength to act as an “independent, monetary policy engine that is doing what it thinks is right and not what’s expedient.”
The Fed has since raised interest rates three times, starting in March. Fed Chair Jerome Powell and his colleagues are trying to rein in an inflation rate that is running far beyond their 2% target. In June, the Fed raised interest rates by 75 basis points, the biggest increase since 1994, lifting the target range for the federal funds rate to between 1.5% and 1.75%.
“We are forecasting a terminal rate kind of in the mid-3% range,” Waldron said Tuesday. “Were we to end up at that place, we can see the economy resetting and being able to grow from there. I think it’s important to reset the price of money in the economy, which is something the Fed is very focused on.”
--With assistance from Annmarie Hordern and Alix Steel.
This article was provided by Bloomberg News.