Fed Is Not Falling Into an Emerging Markets Trap. Not Even Close
Judging by global fund flows, it’s hard to argue investors have lost faith in the Fed.
U.S. Federal Reserve building.
Photographer: Win McNamee/Getty Images
In recent months, the Federal Reserve has taken a lot of heat from asset managers for letting inflation run out of control and now risking a recession with rapid rate hikes.
The chorus of complaints evolves around its perception in the marketplace. “If the Fed doesn’t do its job, the market will,” wrote Bill Ackman, founder of Pershing Square Capital Management. The Fed “risks slipping further into a no-win interaction that is more familiar to developing countries that lack policy credibility,” Mohamed El-Erian, chief economic adviser at Allianz SE, said in a column for Bloomberg Opinion.