The Fed could do with a good dose of humility at this point

America's central bank needs all the credibility it can command

- MOHAMED A. EL-ERIAN

It's easy to think that the Jerome Powell-led US Federal Reserve has been one of the unluckiest on record. From the 2020 pandemic and its messy aftermath to the current tariff-induced economic and financial volatility, it has faced one big external shock after the other. Powell has had repeated run-ins with President Donald Trump, lost key officials over insider trading allegations, seen the institution's credibility hit by the misguided 2021 'transitory' inflation judgment, and more.

Yet, what has made this bad luck worse and more consequential for overall economic well-being is that it has interacted with self-created weaknesses. Unlike other Feds, those have extended to analysis, forecasts, communication and policy responses, repeated missteps that were aggravated by a distinct lack of humility and learning. The result is a Fed whose political independence and market credibility are as shaky as they have been since the late 1970s and early 1980s. And that is bad news for a central bank that faces difficult policy options. It's also bad news for the US economy that has lost other anchors and is suffering its own period of instability at the centre of the global economic and financial order.