The Fed Will Duck and Weave on Policy, But Not for Long
Policymakers will likely avoid thorny questions on the economy and Trump’s criticism of the central bank — at least this month.
The less said.
Photographer: Andrew Caballero-Reynolds/AFP
When it comes to degrees of difficulty, this week’s Federal Reserve meeting is shaping up as a walk in the park compared to what awaits policymakers down the road. Officials will wish — and should prove able — to sidestep complex issues related to both monetary policy and the new political landscape. But it is likely to be a short reprieve for them, and it will deprive markets of the type of meaningful forward policy guidance that can help contain potentially damaging volatility.
You need only to look at the recent strength of the US economy and indications that inflation is not falling as fast as policymakers expected to understand why the Fed will refrain from cutting interest rates on Wednesday. In the process, it risks reminding many of the old, and once discredited notion of “stop-go” policy.