Volatility in equities may soon influence Fed policy, says Moody’s economist

volatility

A deep enough equity market slump could prompt the Fed to rethink its process of policy tightening if market turbulence starts to spill over to the real economy, says Moody’s chief economist John Lonski, writing in a report on October 11.

Lonski says the current process of raising interest rates and winding down quantitative easing “lacks precedent”, which may call for “flexibility” from the Fed. This might, for instance, involving slowing or pausing the rate at which assets roll off the

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