Captain Powell!!

Fasten your seatbelt!

Piloting the economy for landing…

The debate on soft-landing vs. hard-landing has gone on so long and has intensified so much that when I hear “Jerome Powell” or “Chairman Powell”, the visualization that I have is that of “Captain Powell”! I can’t help it, the visualization comes naturally to me.

I see Captain Powell piloting the plane, looking out for the runway, considering the weather conditions, reading instruments (so many of them - CPI, PPI, Inflation Expectations, Unemployment Rate, etc.), directing the crew, calming the passengers, and preparing for landing.

When the flight encounters turbulence (bad data coming in from jobs reports, manufacturing, orders, CPI etc.), the captain announces -

“Ladies and gentlemen, we are experiencing some turbulence. Please return to your seats and fasten your seatbelts.”

Once the flight is past the turbulence, the crew may announce -

“Ladies and gentlemen, the Captain has turned on the fasten seat belt sign. We are experiencing some turbulence. Please return your seats and keep your seat belts fastened. Thank you.”

And as the captain prepares the plane/flight for final descent and landing, you’d expect him/her to announce -

“Flight attendants, prepare for landing please.”
“Cabin crew, please take your seats for landing.”

But, when it comes to the Central Banks, they don’t, or may not. The analogy is good, but it only runs so far. While there are many parallels between the two - flight operations and economy via monetary policy operations, there are many crucial differences (let’s keep that for another day). The parallels are great for visualization and story-telling, but the differences are important to keep in mind as well - if we stretch it too far, one would not explain the other.