- September 21, 2022
- Posted by: Stratford Team
- Category: Economy
The Federal Reserve has a public-relations problem.
In an attempt to rein in too-hot inflation, the Fed has tried to signal to investors and the financial markets its plans for tackling rapid price growth. In order for monetary policy and interest-rate hikes to work, the markets have to clearly grasp the Fed’s goals and fall in line with those objectives. But recent communications from Chair Jerome Powell and other Fed officials have been confused at best — and you only need to look at the market’s considerable shifts over the summer to see that missteps have been made.
This is a problem not only for Powell and the Fed but for the economy. If investors stop listening to the Federal Reserve, even perfect decision-making by the Federal Open Market Committee — the Fed’s main interest-rate-setting committee — can create a tragic misstep that is either too hawkish or too dovish. To actually deliver the desired amount of…
