Nordea discussed its outlook for the FOMC in a recent note to clients, identifying what could turn out to be a costly mistake for the central bank.
Nordea explains:
Powell said that the FOMC members “have resisted the temptation to try and quantify what that means, but when we are above target… we can do that” referring to the “moderate overshooting” on inflation, which that fixed income tensions should build up again ahead of the April inflation print.
Powell and the FOMC risk building up a pent up tantrum scope by refusing to address inflation until it is actually at a pint which augurs tightening of the policy. This still holds the potential to turn into Powell’s taper tantrum.
Nordea explains:
Powell said that the FOMC members “have resisted the temptation to try and quantify what that means, but when we are above target… we can do that” referring to the “moderate overshooting” on inflation, which that fixed income tensions should build up again ahead of the April inflation print.
Powell and the FOMC risk building up a pent up tantrum scope by refusing to address inflation until it is actually at a pint which augurs tightening of the policy. This still holds the potential to turn into Powell’s taper tantrum.