The Federal Reserve’s management of the economy has found a notable supporter.
During a Monday morning segment on CNBC, Evercore founder Roger Altman commended the Fed for achieving “almost perfect” economic conditions, highlighting strong performances in equities, profits, and employment. He noted that the only factor preventing an official declaration of a soft landing is inflation, which remains above the Fed’s 2% target.
“If the landing is complete and the Fed reaches its target, I believe Powell will deserve an ‘A’,” Altman remarked, referring to the Fed’s chairman. “It would be quite a remarkable accomplishment.”
He does not anticipate that the completion of this landing will take much longer.
Despite some worries that rate cuts could trigger a resurgence of inflation, Altman expects to see a slowdown in inflation rates this week with the release of new consumption-expenditure data.
He also shared his perspective on the Fed’s decision to implement a significant rate cut last week.
“I believe the Fed assessed that the downward trajectory of inflation was more predictable than the future of labor markets, which is less certain,” Altman stated. “As a result, they chose to take a decisive action to support labor markets by implementing a 50 basis point rate cut.”
Altman’s endorsement of the Fed marks a notable shift for the bank founder. Last year, he was among those cautioning that tighter interest rates could lead the U.S. into a recession. Now, he commends the fact that unemployment remains at 4.2% and points out that the annualized S&P 500 is on track for its best returns since 1960.
Altman is part of an increasing number of economists who have revised their views on the Fed.
In August, former Treasury Secretary Larry Summers acknowledged that the central bank had managed to sidestep his most pessimistic recession predictions. He stated that the Fed’s actions had redeemed it after its delayed response to inflation during the pandemic.