Former Reporter Assesses Outgoing Central Bank Chair's Performance

Jerome Powell concluded his final press conference as central bank chair on Wednesday, marking the end of his leadership role. After fielding questions for 30 minutes, he departed without lingering for applause from journalists. Many reporters are now preparing assessments of his tenure, focusing on his communication style and decision-making.

Jon Hilsenrath, who covered the central bank for nearly two decades at the Wall Street Journal before starting his own advisory firm, Serpa Pinto Advisory, shared his evaluation in an interview. He assigned two grades to Powell's performance. Hilsenrath commended Powell for handling challenges including a pandemic that disrupted the global economy, a rapid tightening cycle, a regional banking panic, and public criticism from a sitting president.

Hilsenrath noted that Powell built consensus among committee members, leading to mostly unanimous decisions despite potential disagreements. He maintained careful public language to avoid market panic. In response to escalated attacks this spring, Powell issued a calm video message. "I think he went about his business with integrity and goodwill," Hilsenrath said.

On economic management, Hilsenrath offered a harsher assessment, stating that Powell mismanaged the COVID crisis by applying tools designed for demand shocks to a supply shock. The central bank launched large bond-buying programs, cut rates to zero, and promised to maintain them, which contributed to inflation.

Hilsenrath also criticized the slow response to rising inflation in 2021. At a June 2021 press conference, Powell declined to discuss winding down bond purchases, referencing past market reactions like the 2014 taper tantrum. By the time rates were raised nine months later, inflation had reached 7.9%.

Hilsenrath described this as a failure to recognize the need for a different approach. Powell later acknowledged the issue in an August 2022 speech at Jackson Hole, where he addressed the need to combat inflation, even if it caused pain. However, inflation remains above the 2% target six years after the start of the COVID crisis.

Hilsenrath attributed this to overlooking broader trends like the unwinding of hyper-globalization. "I don’t think you could give him high marks on the economy when they’ve failed to hold inflation to their stated goal for so long," Hilsenrath said.

Powell announced he will stay on as a governor until 2028, the first outgoing chair to remain on the board since Marriner Eccles in 1948. He framed this decision as a response to legal attacks on the institution. Hilsenrath interpreted it as a strategic move to preserve institutional independence.

By retaining his seat, Powell prevents immediate filling of multiple vacancies, which could allow new appointees to influence key positions. Even a short stay could provide time for legal challenges to resolve and political conditions to change.