One of the key points that came out of last week’s FOMC meeting was that Fed Chair Kevin Warsh wants the bond market to do more of the heavy lifting with regard to fighting inflation and promoting economic growth. He feels that the market in recent decades has been mollycoddled by the Fed and it is high time for greater price discovery. In this Economics Weekly Richard de Chazal discusses why that view is sensible in this new inflation regime, but why greater price discovery is also a euphemism for increased market volatility.
