“Powell’s innovation as Fed chair was to really care much more about employment, relative to inflation, than his recent predecessors had.
In 2019, he began lowering interest rates during an economic expansion, a genuinely unprecedented action that conceded the rate hikes he introduced the previous year were a mistake.
In 2020, he issued a new formal framework explicitly pushing the Fed away from its traditional fixation with inflation and toward worrying about employment.
He made these changes in the context of a world where inflation was consistently low and employment and wages were short of where they should’ve been. But in 2020, and especially 2021, the tasks before Powell changed. First he had to prevent a pandemic-driven collapse of the global financial system akin to what occurred in 2008.
Then he was — is — faced with the question of what to do now that inflation is high for the first time in decades. That challenge, and the question of whether Powell can be as effective at controlling inflation as he has been at promoting employment, will frame his next term.”