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.