The Phaserl


Don’t Be Fooled by the Fed’s Placid Facade

by Mohamed A. El-Erian,

One of the unwritten rules of modern central banking is that, unless compelled by events on the ground, officials should refrain from making big policy changes during the summer. With many traders on holiday, any sudden moves risk destabilizing markets.

Look for the Federal Reserve to abide by this rule when it meets Tuesday and Wednesday – and the European Central Bank to do the same in early August. Janet Yellen and her colleagues on the policy-making Federal Open Market Committee will maintain their well-telegraphed, gradualist approach, reducing monthly bond purchases by another $10 billion, signaling no urgency in raising interest rates, and reminding us of the importance of looking beyond the unemployment rate to understand what’s happening in the job market.

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2 comments to Don’t Be Fooled by the Fed’s Placid Facade

  • mac

    yawn….Fed is Boss,a Private Company wips the Yanks from pillar to post.


  • Voice of Reason

    Never fight THE FED? What does that mean anymore? Since 2008 and before, THE FED has made over a dozen changes in policy because they do not know what they are doing. They are playing by ear because the US economy is in uncharted waters. So the experimenting will continue until THE FED becomes not the last but the only buyer of resort of US Treasuries. Their ultimate plan is a hefty devaluation of the $ and Dodd Frank legislation to BAIL IN the banks and pay off the trillions of derivatives underwater with unsecured creditors (depositor’s) savings!

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