Grading on a Curve
Bond Traders Detect Fed Error
Central bankers are dampening growth prospects as inflation gain proves elusive.
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The Federal Reserve is getting closer to making a policy error.
That’s the message bond traders sent on Wednesday when the Fed raised overnight borrowing costs for the second time this year. That was widely expected. What was less anticipated was the signal from U.S. policy makers that they still plan on an additional interest-rate increase this year despite relatively weak economic data of late. At the same time, the Fed gave more details about its plan to start unwinding its behemoth balance sheet later in 2017.