History remembers Paul Volcker as the slayer of inflation, and Ben Bernanke as the crisis firefighter. Jerome Powell is in danger of having to play both roles at once — or, what may be worse, to choose between them.
On the face of it, Powell’s Federal Reserve this week pushed ahead with what’s been its policy for the past year — raising interest rates to bring down inflation — and so did other major central banks. But in reality everything’s changed, after a string of bank collapses sent tremors through world markets.
Just a couple of weeks ago, threats to financial stability barely registered on the troubleshooting list for central bankers. Now they’ve rocketed toward the top. Powell and his peers say preventing a re-run of the inflationary 1970s remains priority number one. But the signal is shifting.
