The Tell: The Fed needs ‘an acrobatic sense of balance’ to keep markets calm

U.S. stock-market investors have grown concerned about interest rates of late, with many accepting that they’re going to rise but still worried that it will happen too quickly. According to one analyst, assuaging these fears will be like walking a tightrope.

“Powell’s biggest challenge will be to make clear that while market conditions warrant steady hikes, the federal-funds-rate target will remain well below its levels of the past 40 years,” said Joe Davis, chief economist at Vanguard, who was referring to Jerome Powell, the newly installed chairman of the Federal Reserve.

Davis called this a “tricky” balance to strike. “The message is nuanced,” he said, “and for the Fed to deliver it will demand an acrobatic sense of balance.

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