Guggenheim’s Minerd Says Fed Has ‘Abandoned’ Monetary Orthodoxy

(Bloomberg) — Guggenheim Partners Chief Investment Officer Scott Minerd said the Federal Reserve is in an “inflation panic” as it begins to tighten monetary policy in response to inflation.

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The U.S. central bank has paid too much attention to financial markets at the expense of its job to control money supply and manage its balance sheet, Minerd said during an interview on Bloomberg Television.

“The Fed has largely abandoned monetary orthodoxy,” he said. “It’s trying to be too cute in how it’s managing this.”

The Fed raised interest rates by a quarter of a percentage point Wednesday in an effort to curb some of the hottest inflation in decades. The hike is the first in what’s expected to be a series this year, as the Fed said it “anticipates that ongoing increases in the target range will be appropriate,” and Chair Jerome Powell has pledged to be “nimble.”

Minerd said the central bank believes it has more control than than it actually does, and Powell will try to be a “maestro” in balancing risks between markets and the economy. The Fed is risking an “accident” by failing to commit to controlling money supply, he added.

“We need to control the money supply, control the balance sheet,” Minerd said. “That is not the mindset of the Fed.”