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Gamestop and Market Volatility

Powell did nothing to suggest a rate increase or even the beginning of a taper of bond purchases at this past week’s Federal Open Market Committee meeting. He continued to insist the Fed will remain easy until it surpasses its targeted inflation rate and job growth has recovered. The subtext: The Fed is no longer relying on economic models to gauge when it should tighten monetary policy, but will try to use the available data to judge the strength of the economy.

This change has contributed to shorter-term market volatility, says Lakshman Achuthan, co-founder of the Economic Cycle Research Institute. “The Fed has given up on the framework they had and that Wall Street was following,” he says. “Now it’s a bit untethered and susceptible to the narrative.”


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