Powell has his task cut out: He must restore confidence in the Fed

livemint.com:

Also read: Wall Street today: US stocks mixed, Fed minutes & Jackson Hole in focus While the sudden and large price dislocations were reversed, the unsettling episode felt like a warning of the inherent instability of the financial system. The insecurity was accentuated by what happened in the analyst community. Some well-known Wall Street analysts and observers of finance urged the Fed to immediately implement an emergency intra-meeting rate cut—a move that I argued was unnecessary and potentially harmful.

Economists who, just a few days earlier, had reaffirmed their rosy outlook for the economy rushed to revise higher the probability of an impending recession. One Wall Street bank went as far as declaring that the US economy was already in recession. The overwhelming feeling was that the Fed was once again “behind the curve," just like in 2021 when it failed to respond in a timely manner to the upsurge in inflation, a lapse that continues to have adverse economic, political and social consequences.

I laid out in a July article eight issues crucial to America’s economic well-being and global financial stability that Powell should cover this week in an ideal world. Of course, we don’t live in such a world. Yet it is important to have some sort of benchmark.

I don’t expect Powell to cover all the points that I raised. But I, and others, would urge him to talk clearly about three things: where the economy and policy stand, what the policy destination looks like, and how the Fed will get there. It is particularly critical that people come away from Wyoming with a clearer picture of the new equilibrium policy rate (that neither restrains nor fuels economic activity), the path to that rate, and what a “sustainable 2%"