Joseph Wang Says Fed's Challenge In 2023 Will Be A Political One: 'It Will Really Come Down To…'

Joseph Wang of believes the challenge for the Federal Reserve next year is going to be a political one.

What Happened: Wang, a former senior Fed trader, explained that on one hand the central bank has its employment mandate and on the other hand it also has its inflation mandate and said that there seems to be a lot of political support to be a bit more dovish.

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“Right now we are at multi-decade unemployment levels and you have angry letters from people like Senator Warren telling the Fed not to destroy jobs. If the labor market remains strong next year — and it could because we have a labor force that is not growing the way it used to — I think that gives cover for the Fed to remain higher for longer as they expect,” Wang said in an interaction with Forward Guidance.

Letter To Fed: In early November, Democratic senators had written a letter to Jerome Powell expressing their concerns about the Federal Reserve’s plan to continue raising interest rates at an “alarming pace.”

Wang asserted that how the labor market pans out will be a crucial thing to watch out for going ahead. “So, it will really come down to just how much the labor market softens. My own view is that it will remain stronger than the market expects,” Wang said.

Read Next: Larry Summers Highlights Recession Risk For 2023: 'What Samuel Johnson Said Of Second Marriage Is Often True Of Soft Landings'

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Posted In: NewsEconomicsFederal Reserve2023 outlookInflationJerome PowellRising Interest Rates
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