So Six Questions for Jerome Powell

Powell has still not been confirmed as chair by the Senate, so overheated inflation-fighting rhetoric remains a political necessity. Inflation expectations are consistent with the Fed’s 2% target. The rate-hike path implied by fixed income markets is steep but short, terminating at around only 3% at year-end, consistent with normalization, not tightening. New inflationary impulses coming from the Russian invasion of Ukraine and China lockdowns can’t be addressed by policy. Balance sheet normalization will be cash-flow neutral as the Fed returns excess reserves to banks. If Powell emphasizes these simple facts on Wednesday, stocks can put in a bottom.