The Fed has a problem. Well, it has many problems, but one in particular is how to square the circle of achieving its triple mandate of low and stable inflation, in addition to maximum employment and moderate long-term interest rates (the first two should take care of the third), whilst simultaneously avoiding major destabilizing swings in financial conditions. This is particularly pertinent in a new normal economic environment, one in which the Fed may (importantly) be transitioning to a policy of opportunistic reflation. This topic was broached in a speech by Chairman Powell this week and one last week by Fed Governor Lael Brainard, and is crucially important for investors to be aware of, and something we discuss in this week's Economics Weekly.
For a copy of this report or to subscribe to the Economics Weekly or Economic Indicators reports, please contact your William Blair representative.
Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.