Some comments on Powell's Speech:
Is average inflation targeting much different than "symmetrical" inflation?
Seems like new, potentially scarier, language for essentially the same policy.
What new tools will be used that will assure a different outcome relative to the last ten years?
Rates were on hold for 7 years (with a curve that was 300bps wide) and that did not lead to average inflation of 2%.
Now we have 0% ST rates but a curve that's ~60bps wide.
Are we moving to a more objective policy that can be measured with "rules?"
As in, average inflation based on Core PCE over the last 2-years.
If it remains subjective, it's just a hope and a prayer that asset inflation will spur consumption again.
An overlooked part of the speech, in my view, was the comments on productivity growth.
You can't have productivity growth without investment.
We're not going to have a sufficient supply of financial capital to generate higher investment with massive budget deficits.
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