The stock market is an important price signal, said Kansas City Fed President and FOMC member, Esther George, in an interview with CNBC on Thursday. He further added that he is not surprised to see volatility, which should be considered as it is a sign of tougher financial conditions.
“The Fed’s policy is not directed at the stock market, but the effects of the policies will be felt there,” George said. He explained that families have been in very good shape, but now people are feeling the effects of rising inflation. He stated that the Fed will manage to reduce inflation, but that it is difficult to know how much monetary adjustment will be necessary. Waiting positive real interest rates.
George said she is comfortable with 50 basis point rate hikes. On the possibility of more pronounced increases, she said that for this to happen, the Fed would need to see something “very different”.
Source: Fx Street
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