Confidence in Fed Chair falls to lowest on record as Jerome Powell attempts to balance inflation fight with banking crisis uncertainty - Gallup poll
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(Kitco News) Fed Chair Jerome Powell is looking at the lowest public confidence levels for a Fed Chairman on record, according to the latest Gallup survey. Scores for U.S. President Joe Biden and U.S. Treasury Secretary Janet Yellen also revealed a major lack of confidence.
Only 36% of the Gallup poll respondents said they had a "great deal" or a "fair amount" of confidence that Fed Chair Powell will do what's right for the U.S. economy. This marked the lowest confidence level since Gallup began tracking this measure in 2001.
Powell's mark is lower than Janet Yellen's first year as Fed Chair in 2014. Former Chairman Ben Bernanke's lowest score was 39% in 2012.
On top of that, 28% of respondents said that they have almost no confidence in Powell.
The survey comes as the Fed raised rates by another quarter percentage point last week. This was the central bank's tenth consecutive increase in its aggressive fight against sticky inflation, which brought the federal funds rate to a 5-5.25% range — the highest since mid-2007.
It is common for confidence levels to fluctuate along with the economy's health.
Powell's highest confidence score was 58%, which was reported in April 2020 — at the start of the COVID-19 pandemic when the Fed was quick to respond by cutting rates. This was the highest score for any Fed chair on record since Alan Greenspan in 2004.
However, confidence in Powell suffered when the Fed got caught up in its prolonged fight against stubbornly high inflation. As the Fed raised rates by 5% in just over a year, recession risks rose and the banking sector turmoil accelerated.
Powell is not the only public figure who saw his reputation take a hit. Public confidence in President Joe Biden's ability to guide the U.S. economy is down to only 35% — the lowest since George W. Bush's presidency, which hit 34% during the 2008 financial crisis.
Public confidence in U.S. Treasury Secretary Janet Yellen is at 37% — the lowest level since 2014 when Jacob Lew held the position.
The latest Gallup survey was taken between April 3-25.
Powell told reporters last week that the Fed will be focused on what small and medium-sized banks are doing and credit availability.
"We are very focused on what's happening with credit availability,” Powell said. “Particularly, [we are watching] small and medium-sized banks, who are feeling that they need to tighten credit standards and build liquidity. What's going to be the macroeconomic effect of that? More broadly, we will continue to very carefully monitor what's going on in the banking system, and we'll factor that assessment into our decisions.”
Translating the effects of credit tightening into rate hikes is "complicated and adds further uncertainty," he noted.
On potential rate cuts, the Fed Chair said that inflation is not coming down quickly enough and reversing policy won't be appropriate.