When will the Fed blink?

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Via Ambrose Evans-Pritchard:

Monetary tightening by central banks is like trying to pull a brick across a rough surface with elastic: nothing happens; still nothing happens; then it leaps up and hits you in the face.

The US Federal Reserve’s Jerome Powell may have a broken nose after asserting stubbornly this week that he would go on shrinking the Fed’s balance sheet by $US50 billion ($70.5 billion) a month, even though the world economy is coming apart at the seams. Markets expected a rise in interest rates at Wednesday’s meeting. But they did not expect the Fed’s “dot plot” sketch to schedule two more rate rises in 2019.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.