It is understandable why a central bank would print money to purchase assets at the height of a financial crisis. But continuing such policies under conditions of relative tranquility makes little sense – and raises serious risks.
LONDON – In the run-up to the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole, Wyoming, last month, the discussion had focused on whether monetary policy should be tightened in response to higher US inflation. By suggesting that asset purchases would be tapered first, and that interest-rate increases would come much later, Fed Chair Jerome Powell has shifted the conversation to the question of how policy should be tightened.
LONDON – In the run-up to the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole, Wyoming, last month, the discussion had focused on whether monetary policy should be tightened in response to higher US inflation. By suggesting that asset purchases would be tapered first, and that interest-rate increases would come much later, Fed Chair Jerome Powell has shifted the conversation to the question of how policy should be tightened.