Beware of the Fed’s Contrived Consensus
After absorbing the US Federal Reserve's repeated assurances that a “fundamentally healthy” economy gave it ample time to decide on when to cut interest rates, the market was caught by surprise when new data suggested otherwise. Such is the danger of signaling a consensus where none exists.
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CAMBRIDGE – Consider last week’s tale of two central banks. Each is long-established, with influence that extends well beyond its country’s borders, and both are pressed to make delicate judgment calls aimed at continuing to reduce inflation while avoiding undue damage to growth and jobs. In the event, they end up taking very different approaches within 24 hours of each other.