Filling Out the Fed
Last week was an eventful week for the Federal Reserve, not only due to critical appointments and confirmations, but also because the latest round of inflation data has made the central bank’s forecasting skills seem still less prescient and its power to determine the macro economy even more precarious. As we noted in our reports (see below), Senate Republicans appear ready to let Mr. Powell off the hook, doubtless because they view him as the least objectionable option from their perspective than anyone else President Biden might nominate. Instead, they have targeted Lael Brainard’s vice-chair nomination as the one on which they’ll take an anti-inflation stand. For good measure, Republicans are also and more quietly signaling to the Fed that, if they’re unhappy with either monetary or regulatory policy, they will stop just talking about Fed independence and start taking it away.