In the space of less than two years after he appointed Powell, Trump tweeted about the Fed 100 times. The oil embargo imposed by the Organization of Arab Petroleum Exporting Countries in October 1973 was the coup de grace, greatly amplifying the inflationary problem created by the laxity of the Burns Fed. As the late, great historian of the Fed Allan Meltzer showed, the Fed raised rates plenty of times during the Great Inflation. Within two years, the Fed rate was back to 5.25% — only 75 bps above the start of the previous hiking cycle. To quote Meltzer again, bringing down inflation expectations ultimately necessitated “more restriction than anyone on the FOMC had anticipated.”Will the Powell Fed be more like the Burns Fed or the Volcker Fed?

Source: Washington Post June 19, 2022 19:11 UTC