Dream team Powell and Yellen screwed it up

U.S. Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell had everything they needed to work together successfully. But the dream team blew it: US inflation rose to a new record high of 8.6 percent in May.

Yellen and Powell have known each other for a long time since they were together at Fidel, where Yellen Powell was a pioneer. As a result both are experienced in monetary policy and Powell is also experienced in monetary policy. Both are considered to be balanced and integrated, and Yellen also has a good reputation as an economist.

Cooperation between monetary and monetary policy is crucial: the central bank should be politically independent, but the two spheres are so closely intertwined that nothing sensible can come about without mutual understanding between the actors.