For Jerome Powell, it’s all or nothing

Frankfurt Jerome Powell should have breathed a sigh of relief this week. Because the latest inflation data seem to confirm the thesis of the head of the US Federal Reserve (Fed) that the high inflation in the US is a temporary phenomenon. The new figures have sparked a discussion: Are we now seeing the “peak”, the highest point of inflation? Does the curve go down again afterwards?

It has not yet been decided whether the most powerful man in the international capital markets is on the right track. But: “Powell made a point,” comments US analyst Ed Yardeni from Yardeni Research.

Prior to the latest inflation data, there had been concerns that a further sharp rise in the rate of inflation could force Powell to announce a tightening of monetary policy (“tapering”) in clear words after the Fed meeting next Wednesday. And, given the relatively high valuations on the stock market, that might not have caused a huge crash, but it could have triggered a significant correction.