Because Powell cares more about markets than the real economy or wealth inequality. Also they tend to care much more about the short term than the long term.
People will tell you that it's not in the Feds mandate to care about those things, and they don't actually care about markets, but it's clearly not true when cast in the light of their actions. Or to any rational observer that follows them closely.
Even in Powell's presser today he spent a lot of time talking about being sensitive to markets. Why didn't they raise rates in the entire year while inflation was increasing and the labor market already showed signs of overheating? That one's easy too. Because Powell's nomination was coming up and he wanted to maintain easy policy to boost his chances to get reappointed.
Why did they continue QE policy of buying assets to drive down interest rates while inflation was over 7%? Because he knew if he ended it abruptly it would cause a market selloff.
He cares about the real economy to the extent that their policy doesn't significantly impair asset pricing.
sad but true. The only thing that Jpow cares about is the markets. In his defence the economy is made of people and crashing the market/causing recession is going to cause more grief to the public that is already overwhelmed with covid.
People will tell you that it's not in the Feds mandate to care about those things, and they don't actually care about markets, but it's clearly not true when cast in the light of their actions. Or to any rational observer that follows them closely.
Even in Powell's presser today he spent a lot of time talking about being sensitive to markets. Why didn't they raise rates in the entire year while inflation was increasing and the labor market already showed signs of overheating? That one's easy too. Because Powell's nomination was coming up and he wanted to maintain easy policy to boost his chances to get reappointed.
Why did they continue QE policy of buying assets to drive down interest rates while inflation was over 7%? Because he knew if he ended it abruptly it would cause a market selloff.
He cares about the real economy to the extent that their policy doesn't significantly impair asset pricing.
Pretty sad tbh