"The Fed Must Stop Pandering To Markets" Or Face The Unintended Consequences

The Fed needs to "let the market cry itself to sleep," warns Triple T Consulting’s Sean Keane, and can't "keep pandering to each selloff because traders fear that the lights are going to be dimmed."



As Bloomberg reports, Keane adds that

Each Fed response to "such market episodes" will make the eventual exit harder and more painful; it should be hoped that Fed "sticks to its plans" and ends QE


Few now believe Fed’s asset purchases are boosting the economy;


Some argue the Fed is "accentuating a distortion in the markets" that's already having "unwelcome and unintended consequences."

Likely that FOMC statement will offer some "palliative to the markets by making clear that ‘considerable’ period language remains"

However, be careful what you wish for...

If Fed were to delay QE's end because of recent volatility, the market would "probably grow alarmed" that the central bank was more worried about global growth than had previously been assumed


Fed’s messaging would become subject to another round of market criticism and its eventual exit would become even "more difficult to execute."

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Two words - boxed in!