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A Looming Disconnect Between The Economy And Financial Markets

July 1st, 2019 · No Comments

  • The Fed is mostly focused on conditions in the real economy, loosening policy when growth slows and tightening when the economy grows too hot.
  • It only takes on board financial market conditions when these become more extreme.
  • However, because changes in Fed policy have a much more immediate and dramatic influence on financial markets, the financial community parses every word of every Fed official.
  • This isn’t a problem when financial markets and the economy are aligned. However, when they are not, this can become a serious problem for investors.

Source: A Looming Disconnect Between The Economy And Financial Markets | Seeking Alpha

Tags: Monetary policy