As stocks fell for a fifth consecutive day Wednesday, investors thought they’d hear words of encouragement from Federal Reserve Chairman Jerome “Jay” Powell.
After all, one of his predecessors, Alan Greenspan, was behind “the Greenspan put”—the message (nod, nod, wink, wink) that if market conditions got rough, the Fed would stay steady or cut rates to put a floor under the market.
That policy mostly continued under Ben Bernanke and Janet Yellen. Bernanke, having barely survived the financial crisis and Great Recession, was understandably cautious. So, when his hint that the Fed might stop buying securities triggered a “taper tantrum,” Bernanke held off. The Federal Open Market Committee (FOMC) didn’t raise rates once during his tenure.
Yellen was only slightly less cautious: She waited until December 2015 to raise fed funds above zero for the first time in seven years, and raised it only five times during her tenure, despite an economy that was growing nicely.
Jay Powell, however, is taking a different path.