HomeFinancial MarketsFed Reserve, ECB Look to Avoid Past Mistakes in Next Policy Decision

Fed Reserve, ECB Look to Avoid Past Mistakes in Next Policy Decision

Federal Reserve Chair Jerome Powell will look to avoid past mistakes when the Federal Reserve decides how its monetary policy should proceed at its next policy meeting in May.

For Powell, one such mistake could be the Federal Reserve’s decision in the 1960s to implement a series of stop-go policies when faced with skyrocketing inflation.

European Central Bank President Christine Lagarde will be looking to avoid rash changes when the ECB reconvenes in the next two weeks, as will Bank of England Governor Andrew Bailey.

“The balance is not whether to over-tighten, but how much to over-tighten. Do you decide that’s enough, or do you keep going until something breaks? That’s a hard judgment,” Michael Saunders, former BOE rate setter and current Oxford Economics advisor observed. “It’s a difficult dilemma … but no one becomes a central banker to win a popularity contest.”

On May 2, the Federal Reserve is expected to implement another quarter-point increase to a range of 5% to 5.25%. The ECB is expected to decide between a quarter or half-point increase.

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