The Fed: The bond market is sitting next to a sleeping tiger — the Federal Reserve

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Pictured: the Federal Reserve

The bond market seems unaware it is sitting next to a sleeping tiger — in the form of the Federal Reserve, said Jan Hatzius, chief economist at Goldman Sachs.

The U.S. central bank is going to have to be much more aggressive than the bond market has discounted, or Fed officials now believe, in order to slow the economy to a sustainable pace, the prominent economist said in a note to clients released late Monday.

At issue is a technical but important debate currently underway about why the U.S. economy is so sluggish with interest rates so low.

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