Inside Track
Fed Chair Admits Recession, Rate Hikes to Prank Callers
According to Bloomberg on April 27, during a prank call with two Russians impersonating Ukrainian President Volodymyr Zelensky in January this year, U.S. Federal Reserve Chair Jerome Powell made some startling admissions, ranging from inflation to the possibility of establishing a Federal Reserve bank in Kyiv. Video clips apparently of Powell on the call initially emerged on Russian television.
“Chair Powell participated in a conversation in January with someone who misrepresented himself as the Ukrainian president,” a Fed spokesperson said. “It was a friendly conversation and took place in a context of our standing in support of the Ukrainian people in this challenging time. No sensitive or confidential information was discussed.”
However, thinking he was speaking with Zelensky, Powell did divulge during the call that the Fed would increase rates two more times, despite having been more discreet about the topic even when testifying before Congress. He also admitted that the U.S. economy would grow “at a subdued level” and that a recession would be “almost as likely as very slow growth,” as the Fed “raised rates quite a bit,” a move he justified on the pretext of curtailing inflation. “What we need is a period of slower growth so that the economy can cool off, so the labor market can cool off, so that wages can cool off…. That’s the only way we know to bring inflation down. And it can be painful, but we don’t know of any painless way for inflation to come down.”
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