Federal Reserve Policy Is Becoming Less Predictable
Chairman Jerome Powell isn’t married to the economic models endorsed by the central bank’s staff.
The Fed faces some tough decisions in the months ahead.
Photographer: Brendan Smialowski/AFP/Getty Images
The Federal Reserve this month is widely expected to raise interest rates for the eighth time in the current hiking cycle that began in December 2015. Get ready for tensions within the Fed to spill over into the public as monetary policy moves closer to estimates of the neutral rate.
The Fed staff will likely push harder for policy makers to follow a model-based approach with fairly hawkish implications that would result in rates rising beyond what is considered a neutral level. Although Fed Chairman Jerome Powell doesn’t look married to the Fed’s models, he hasn’t provided a great deal of alternative guidance. That means policy will become less predictable in 2019.