On Powell in Rehab

In a joint interview with Yellen and Bernanke, Powell made amends for his disastrous December FOMC performance. He affirmed with clarity that there is no inflation risk from rising wages. He cited the story of how Yellen backed off rate hikes for a year after the ill-advised lift-off of 2015. He had no choice but to say “no” to the question of whether he would resign if asked. This confirms that he has cut a deal to be more dovish going forward, or resign at some point, or both. This clears a major risk overhanging the economy.