Chairman Jerome Powell confirmed what many expected. The Fed is ending the effort to "normalize" – long before interest rates and the central bank’s balance sheet size gets close to normal.
Financial markets are hopelessly addicted to stimulus. The central bank fostered the addiction and has no intention of forcing markets into withdrawal.
If stock prices deteriorate and growth continues to slow, investors can expect the Fed to quickly ramp up the stimulus, once again.
The FOMC announcement was a complete about-face. Until December, Fed bankers acted confident their extraordinary policy measures had promoted sustainable economic growth. Now, after only modest monetary tightening, that growth appears to be in jeopardy.
It is good to see the mainstream financial press and more institutional voices on Wall Street beginning to question the Fed’s credibility.
About the Author:
Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals' brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.