Fed Officials Stare Down Market Volatility, Say Inflation Remains Paramount Focus – By Howard Schneider and Lindsay Dunsmuir (IB Times) / Sept 26, 2022
U.S. Federal Reserve officials on Monday sloughed off rising volatility in global markets, from slumping U.S. stocks to currency turbulence abroad, and said their priority remained controlling domestic inflation.
Asked at a Washington Post event whether he felt U.S. investors had taken an overly optimistic view of Fed policy until a recent sharp sell-off begin, Atlanta Fed president Raphael Bostic said that was beside the point.
“I don’t know whether they’re too optimistic or not optimistic enough … The more important thing is that we need to get inflation under control,” Bostic said. “Until that happens we’re going to see I think a lot of volatility in the marketplace in all directions.”That applied as well to the recent upheaval in the United Kingdom. Tax cuts proposed by the government of new British Prime Minister Liz Truss, with their potential to further stoke inflation, raised the prospect that the country’s fiscal policy will conflict with efforts by the Bank of England to tame price increases with higher interest rates.
The mixed signals have sent the pound into a tailspin, adding another dose of volatility to world financial markets already coping with Federal Reserve interest rate increases moving faster and higher than anticipated.
