Business
Why markets barely blinked at Fed’s new direction – The Sydney Morning Herald
The Fed turned its back on nearly 40 years of prioritising a low inflation rate with its bold new policy. The financial markets’ reaction told us a lot.
In other words, the Fed will allow inflation to overshoot two per cent for some indeterminate period in a form of compensation for periods of low inflation. The two per cent target has become a long term average rather than a ceiling.
In essence, it says that even more debt and leverage is encouraged and that the Fed will provide a rising safety net under risk assets, in the process exacerbating the wealth inequality that has already produced significant social stresses in the US and elsewhere….
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