#stockmarket #youtube #inflation
As prices come down, some companies are passing on extra costs, making the Fed’s job to fight inflation that much harder. UBS Chief Economist Paul Donovan joins Rachelle Akuffo and Brad Smith to break down the issues surrounding Fed Chair Jerome Powell’s approach towards policy making. Donovan says that when it comes to fighting inflation, Powell, “tends to take an economics 101 approach.” Donovan questions the moves by Powell, calling it, “not the best approach,” and points to excess demand in the United States that is driving inflation. He adds that while companies are continuing to raise prices, “a more robust explanation of what’s going on with inflation,” is owed to consumers. If not from Jerome Powell himself, Donovan calls for an explanation from, “someone who is a qualified economist at the Fed.” C
KEY VIDEO MOMENTS
00:00:15 – Breaking down what’s driving inflation. Disinflation vs. Deflation 00:00:30 – The problems with Jerome Powell’s approach
00:00:52 – What’s driving inflation
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Jerome Powell, the chairman of the Federal Reserve, has been praised for his pragmatic and data-driven approach to policy making. He has often been described as taking an Econ 101 approach to monetary policy, meaning that he focuses on the basic principles of economics rather than complex models and theories.

Powell’s approach has been particularly valuable during the COVID-19 pandemic, when the economy has been hit by a series of unprecedented shocks. His decisive actions and willingness to pivot in response to new data have helped to stabilize financial markets and provide support to the struggling economy.

One key example of Powell’s Econ 101 approach is his emphasis on keeping inflation in check. Inflation is the rate at which the overall level of prices for goods and services is rising, and it can be a major problem for the economy if it gets out of control. Powell has made it clear that he views keeping inflation under control as a top priority, even if it means tolerating a little bit of economic growth.

Another example of Powell’s pragmatic approach is his willingness to adjust interest rates in response to changing economic conditions. When the pandemic first hit, Powell quickly cut interest rates to near zero in order to stimulate economic growth. As the economy has begun to recover, he has signaled that he is open to gradually raising interest rates again in order to keep inflation in check.

Powell’s approach has also been characterized by a willingness to listen to a broad range of viewpoints and to take a measured approach to policy making. He has worked closely with other Fed officials, as well as with Congress and the White House, to craft policies that are well-suited to the country’s needs.

Overall, Powell’s Econ 101 approach to policy making has been a major asset for the Federal Reserve and the broader economy. By focusing on the basics of economics and staying attuned to changing economic conditions, Powell has helped to safeguard the stability of the financial system and to support economic growth in the face of unprecedented challenges.