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Peter Morici: Powell goes agnostic about economics

Federal Reserve Chairman Jerome Powell has decided to listen more to markets and to become agnostic about economics.

During his first year, the Fed increased the federal funds rate by a full point to about 2.4% — and continued to run down its holdings of mortgage-backed securities.

Through December, the stock market indexes SPX, +0.64% had fallen a record seven times in a row following Fed policy committee meetings and, in a stunning vote of no confidence, dramatically after the chairman spoke in December.

Powell has backed off. He won’t be raising the federal funds rate again any time soon and has promised to be more cautious about liquidating the Fed’s holdings of the mortgage-backed securities and Treasuries.

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