Forty years of Federal Reserve monetary policy: "Volcker's inflation control" - "Greenspan's miracle" - "Bernanke's QE", what will Powell leave behind?

Over the past forty years, the monetary policy of the Federal Reserve has been steered by multiple chairmen, each uniquely addressing the challenges of their time. From Volcker's iron-fisted interest rate hikes to curb inflation, to Greenspan leading the United States through economic prosperity, and then Bernanke's quantitative easing reshaping the economic environment post-financial crisis. Today, the Federal Reserve is facing the most complex global economic situation in history. This Thursday, Powell made a historic announcement of a 50 basis point rate cut, once again initiating a new round of easing. Can he replicate the success of past leaders and guide the U.S. economy towards a soft landing? What kind of imprint will he leave on the historical process? "Volcker Moment": Firmly suppressing inflation, even at the cost of economic recession In the late 1970s, the United States was deeply mired in stagflation, with high and persistent inflation. Faced with a dire situation, then Federal Reserve Chairman Paul Volcker implemented an unprecedented aggressive tightening policy. Between 1981 and 1990, the federal funds rate soared to historical highs of 19-20%. While this measure successfully curbed inflation, it also led to an economic recession, with the unemployment rate soaring to nearly 11%, the highest since the Great Depression. During this period, the Federal Reserve interest rates fluctuated frequently. On November 2, 1981, the rate sharply dropped to a target range of 13-14%, then rose to 15% in the first four months of 1982, before falling to 11.5-12% on July 20, 1982. Over the 10-year period, the "effective" federal funds rate averaged 9.97%. Since November 1984, the rate has never exceeded 10%. Unlike today's method of controlling inflation by directly adjusting interest rates, Volcker's monetary policy centered on limiting the growth of money supply. Despite criticism, his strategy eventually brought inflation down to below 2% in 1986. Alan Greenspan: Successfully guiding the U.S. economy to a soft landing During his tenure as Federal Reserve Chairman (1987-2006), Alan Greenspan played a crucial role in U.S. monetary policy, economic management, and global economic affairs. In August 1990, the U.S. economy entered an 8-month recession, and Greenspan successfully led the Federal Reserve to address it. By May 2000, he raised the federal funds rate to a high of 6.5%, a record at the time. In September 1992, the rate dropped to 3%, the lowest in a decade. In 1995, Greenspan successfully guided the U.S. economy to a soft landing, paving the way for subsequent economic prosperity. In 1994, the Federal Reserve significantly raised interest rates to combat inflation pressures. By 1995, the labor market had noticeably cooled. In May 1995, monthly employment numbers showed negative growth. In 1995 and early 1996, the Federal Reserve successfully cut rates by 25 basis points three times. By mid-1996, monthly job additions rebounded to around 250,000, and for a long time thereafter, inflation was not a major issue for the U.S. economy. Greenspan's tenure was the longest in Federal Reserve history. He was revered as an "economic maestro" for successfully guiding the U.S. economy through the longest economic expansion at the time. Under his leadership, the Federal Reserve informally established a 2% inflation target for the first time, a decision that had a profound impact on modern monetary policy Ben Bernanke: Personally Initiating QE In the midst of the catastrophic 2008 financial crisis, Ben Bernanke led the Federal Reserve to initiate Quantitative Easing (QE) and zero interest rates, rescuing the U.S. economy from the abyss. Prior to this, interest rates had reached a high of 5.25%. After the subprime mortgage crisis, the Federal Reserve cut interest rates by 100 basis points, approaching zero. During this period, the Federal Reserve implemented the policy of Large-Scale Asset Purchases (LSAP), also known as Quantitative Easing, aimed at lowering long-term interest rates and stimulating economic growth. This measure led to a sharp expansion of the Federal Reserve's balance sheet, skyrocketing from an initial $870 billion to $4.5 trillion. It was only after 2015 that the Federal Reserve gradually raised interest rates by 25 basis points each time, reaching 2.25-2.5% in 2018