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Opinion
John Authers

Markets Overestimate a ‘Powell Pivot’ at Their Peril

This isn’t 2018, when inflation wasn’t even a worry. The central bank can’t afford to back off meaningful rate hikes this time.

Jerome Powell will need to prioritize inflation over market performance.

Jerome Powell will need to prioritize inflation over market performance.

Photographer: Al Drago/Bloomberg

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There’s one key assumption undergirding markets at present. Many are resigned to the notion that the Federal Reserve will speed up the process of tapering off its QE asset purchases, so that it can start raising rates in the new year to deal with what it now acknowledges to be a growing problem with inflation. But, and this is the critical assumption, it won’t have to hike rates too much, and can finish the job still below 2%.