Economy

Why the Fed’s new inflation policy could backfire

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The Marriner S. Eccles Federal Reserve building stands in Washington, D.C., U.S., on Tuesday, Aug. 18, 2020.

Erin Scott | Bloomberg via Getty Images

Certain often-overlooked markets may be telling us that the Fed’s new policy framework is going to have some immediate unintended consequences.

While that may be a bold claim, there is hard evidence that some changes are already reshaping the economic and inflation outlook. The Fed’s new policy framework is having a pronounced effect on inflation expectations even though the economy remains mired in the deepest recession since the 1930s.

It’s true that manufacturing numbers out this week were stronger than expected and that third-quarter GDP is…



Source cnbc.com

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