Party On: Fed Chairman Powell Capitulates to the Market
FED Chairman Powell, who for a time was appearing to go rogue and stray off the beaten path of loose monetary policy paved by so many of his predecessors, has collapsed his resistance and utterly given in to the demands of the market.
At a forum hosted by the American Economic Association in Atlanta last Friday, FED Chairman Powell was a “good boy” and did exactly what Wall Street demanded.
He stuck to a well-written script of carefully selected words, focusing time and again on a few in particular, but most notably the word “patient”.
The context in which this word was used was in reference to raising interest rates.
As we have noted in previous articles, the hawkish approach adopted by FED Chairman Powell was ill received by both the markets and President Trump, who has been in an open feud with the FED.
This insistence on raising interest rates has caused the markets to gyrate wildly, causing sporadic, sharp dips lower in the broad stock market. This struck deep fear into investors, as they began to worry that the end of the “easy money” era was over.
Like his predecessor Janet Yellen, who also carefully chose the word “patient”, Powell intentionally selected this word to signal to the markets that (also like Yellen) he was willing to put on the velvet gloves when it came to handling the markets.
FED Chairman Powell stated the following:
“We’re listening carefully with … sensitivity to the message that the markets are sending and we’ll be taking those downside risks into account as we make policy going forward.”
…click on the above link to read the rest of the article…
