Jerome “Jay” Powell was added to the Federal Reserve Board in May 2012. Quite an auspicious time to be thrown into things, Powell had avoided the “unexpected” liquidity crisis of 2011 but he did have to deal with its aftermath. By September of 2012, the Federal Reserve was once again debating yet more QE; a third round.

Powell was among the more skeptical of the FOMC members. In this day and age that counts him as a hawk. It’s not that he disagreed with the weakness then abundantly clear in the economy, it’s that he interpreted that weakness very differently.

From the September 2012 FOMC transcripts:

MR. POWELL My conversations with a group of about 10 diverse industrial companies—this is not autos, so it’s away from one of the real strengths. The other parts of the industrial sector, let me say, are pretty weak, and they strongly confirm that last point about employment. Outside of a couple of bright spots like housing and light vehicles, it’s soft everywhere, especially in Europe. Big customers are postponing orders; they’re not canceling them. It’s nothing like from 2008 to 2009, but the softness that began about six months ago is now the new normal for these companies. The game is about share gain and taking out costs. It’s a low-growth environment. All new projects are on hold, and there is no hiring.

From that assessment, you might wonder how in the world he was against QE3. What he was saying sounded truly awful, and was very much consistent with the dour appraisals presented by the other committee participants (Janet Yellen in particular). According to Powell, however, QE3 was going to be an overreaction of sorts:

MR. POWELL The question that looms is—and I’m going to, again, leave aside monetary policy—when do we break out of this? And I really do believe that we will. We always have. I can remember many of these cycles where you really wonder if this is it and we’re never going to get out. I really do feel that if you look at our own projections, essentially, all of us project that we’re going to have those 3 percent, 4 percent catch-up years. They’re now scheduled for 2014 and ’15, but really, there’s a ton of uncertainty around that. So I’m going to share this highly anecdotal evidence in an effort to end on something of a high note.

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