John Authers, Columnist

Markets Finally Grasp What the Fed Means by QT

Investors and the central bank are at odds, and it’s not clear who deserves to win. Also, capitulation time and Mexico’s ‘AMLO Bounce.’

December 20, 2018 at 1:00 AM UTC

By John Authers

John Authers is a senior editor for markets and Bloomberg Opinion columnist. A former chief markets commentator at the Financial Times, he is author of “The Fearful Rise of Markets.”

Federal Reserve Chairman Jerome Powell may have just made a big mistake.
Photographer: Bloomberg/Bloomberg

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Markets awoke Wednesday expecting a “dovish hike” from the Federal Reserve. Chairman Jerome Powell thought that’s what he delivered, with policy makers now forecasting only two interest-rate hikes next year, not the three they expected in September. Powell added that the federal funds rate is within the range of estimates of what is considered neutral, which neither stimulates nor constrains the economy. Recall how in early October he caused a stir by saying the rate was still “well below” neutral.