Odd Lots · Tuesday, September 1, 2026
Adam Posen argues that the Powell-led Fed was 'late to the game' in hiking rates in 2022 and made a mistake by cutting rates multiple times the previous year. He believes that even when controlling for factors like energy dependence and fiscal policy, US inflation has been more persistent compared to other developed economies.
“But I do think it is entirely justified to say, um, care pal with the deference and buy-in of the committee. Basically start was late to the game and hiking and 2022. was early, if not, in my view, profoundly mistaken to cut multiple times last year and is behind the curve again.”
“And the international comparison actually doesn't flatter the US. You have to do a little bit of careful things on the data. But basically, if you control for three things, which is how dependent on imported energy are you, how What was the inflation going into the last few years? So what do you have to clean up from the predecessor? And then out of the Fed or any centralized control, how loose is your fiscal policy? When you look at that, the Fed is more of an outlier.”
“So the ECBs kept inflation down. The Swiss National Bank's kept inflation relatively down. Bank of England's almost the same as the Fed.”