Economics
Why Everyone Is Suddenly Talking About Financial Conditions
And why the Fed will soon be talking about it, too.
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Most economists who expect the Federal Reserve to hold off from raising interest rates on Thursday point to more restrictive financial conditions in the wake of August's market turmoil as a key reason to refrain from liftoff.
"The recent volatility in financial markets introduces a new wrinkle into the Fed’s calculus," wrote Neil Dutta, head of U.S. economics at Renaissance Macro Research, for example. "The Fed does not want to send a firecracker into fragile capital markets nor do they want to give the impression that they are captive to markets either."