Bloomberg Law
March 16, 2023, 9:00 AM

A Year In, the Fed’s Scramble Is Looking Costly: Jonathan Levin

Jonathan Levin
Jonathan Levin
Bloomberg News

Behind Door No. 1: an ever-approaching recession. Behind Door No. 2: entrenched inflation. Unfortunately, it’s looking like a lose-lose scenario of policymakers’ own making.

The original mistake, of course, was Chair Jerome Powell’s eagerness to dismiss the signs of inflation in 2021 as “transitory.” Even in the face of extraordinary fiscal stimulus and a strong economic recovery, he refrained from turning off the quantitative easing spigot and left interest rates near zero until inflation measured in the consumer price index was near 8%. An already hot housing market was goosed by mortgage rates below 3%; speculative cryptocurrencies and tech stocks ...