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The great Fed pivot

Switching from 'further gradual increases' to an overly patient policy stance might potentially be elevating the risk of a more negative shock.

Fed chief Jerome Powell addressing the media on a change in direction on March 20. The current level of the funds rate is far below the average amount of conventional policy space needed to cushion the subsequent downturn.

SINCE the end of last year, the outlook for monetary policy globally, especially in the US, has changed dramatically. Before the December 2018 Federal Open Market Committee (FOMC) meeting, we noted that a "flatter Fed rate path is probably more prudent than a progressively steeper inclination"....

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