You can imagine an alternate universe where the Fed is a little quicker on its feet and more willing to surprise markets in which it 1) Cut 25bps in July, 2) would have cut only 25bps in September, with no need for a super-sized move, 3) Did another 25bps in November then 3) Skipped this month.
Reposted from
Jason Furman
I don't know why the Fed cut. Progress on inflation is at least temporarily stalled. Demand is strong. Financial conditions have loosened. And this move is inconsistent with the implicit reaction function they previously set out.
Likely not a consequential error. But still.
Likely not a consequential error. But still.
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