Fed Watch: ‘New’ Policy Framework, Batteries Not Included

Bottom line: I readily admit the Fed will not be raising rates and/or reducing its quantitative easing (QE) purchases any time soon. However, the implications of this new policy framework cannot be underestimated. The bond market’s response to ‘letting things run hot’ definitely has the potential to put a wrench in the policymakers’ best-laid plans. Want another fun tidbit? Powell’s term as chair ends in early 2022. In other words, he may not even be around to actually implement this new approach!

Unless otherwise stated, all data sourced is Bloomberg as of September 11, 2020.

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