PremiumBy Seth Carpenter, chief global economist at Morgan Stanley The Fed’s Jackson Hole conference has a reputation for making news. In years past, the Fed Chair has on occasion delivered big reveals about the future course of monetary policy and its tools in ways that have moved markets. On Friday, we heard from Chair Warsh in the mountains of Wyoming, and after he reinforced the FOMC’s commitment to 2% inflation, markets reacted by pricing in more policy rate hikes.
Why Morgan Stanley Is Keeping An Eye On The Fed's Balance Sheet After Warsh's Jackson Hole Speech
"A reduction of the balance sheet is coming, albeit with a very different view on how that outcome would feed through to the economy and ultimately to inflation. For markets, the need to consider both tools will force extra debate about how to price policy going forward."
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