The Fed appears willing to allow inflation pressures and growth to head higher without combating them with too many rate hikes.
Jerome Powell has yet to oversee his first Federal Open Market Committee (FOMC) meeting as the newly minted chair of the Federal Reserve. But he may already have been backed into a corner.
It is not often that the Federal Reserve’s FOMC minutes pique much interest. Typically, they simply elaborate the Fed’s outlook for policy and the reasoning behind it with little incremental information. That probably should have been the case with the latest minutes, but it was not. Instead, immediately following the release, the dollar, equities and the yield on government bond went on a wild ride.
The question is why? And does it really matter? The answer is the “Powell Pact”—the awkward deal between the Fed and markets. Powell did not choose to be a part of it, but it is his to own now.