Nobody is forecasting a recession soon. But economists expect the Fed to cut rates to zero again when the next one hits because the policy rate probably won’t be much above three percent going in.
“It is not hard to believe that sometime in the next four years we will have a recession starting from a point of relatively low nominal interest rates,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co.
Powell is likely to rely on a competent Fed staff, and his associates on a policy committee packed with the nation’s top economists are long on policy experience, such as San Francisco Fed President John Williams and Fed Governor Lael Brainard. Will that be enough to keep the economy chugging along?
“The Fed Chairman needs to lead the committee, not listen to the committee and decide what to do based on the consensus of views around the table,” said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York. “Powell has a steep learning curve ahead of him. It’s not going to be easy.”
This article was provided by Bloomberg News.