Wall
Street went a bit berserk last week taking the global markets on a roller
coaster ride with it; Jerome Powell took over as the Fed Chair in the same
week, is too much to be a coincidence? A calm and competent Janet Yellen
chaired her last FOMC meeting on Jan 31, and bid goodbye to her job that she did splendidly for 4 years.
Yellen
spent 14 years in Fed, a large part of which she served as a loyal and able
deputy to her predecessor Ben Bernanke. This also ensured continuity post
Lehman Crisis and a new era of easy money. Yellen was the first woman to lead
Federal Reserve in its 105 years history. In a fairer world, her tenor would
have been extended, as was, most of her male predecessors’.
“Under Yellen, the US unemployment rate has fallen the most of any Fed Chair
term in modern history” said The Washington Post. Unemployment rate dropped
from 6.7% (start of her tenor) to 4.1% - even this didn’t push her to quicken
the pace of rate hike, even as economists professed inflationary fears. She kept an ear to the ground while leading the
organization, and maintained lower rates and looser monetary policy for the
greater good of the economy.
In
the recent times though, bond yields have been heating up on speculation of
inflationary pressures thus quicker rate hikes. This fear of course has had far
reaching effect spreading across global financial markets. Change in the top
job in Fed feels like a tectonic shift given the fragile nature of the markets
at present. Though Powell is expected to be following in the footsteps of his
predecessor, Yellen was well entrenched, hence seemed well positioned to steer
the economy without causing too many ripples.
So
welcome to one more newness, I suppose; or not so new, maybe? Political agenda
superseding everything else? God
Bless America!
(and
as I was writing this I couldn’t stop thinking of you Dr. Rajan! Incidentally, its Valentines Day today)
