JP Morgan: The market has lost faith in the fed

David Kelly, Economist at JP Morgan says the Fed’s inaction on rates has created new uncertainty and is actually helping to subdue growth. “There are two things to bear in mind. The first thing is that markets hate uncertainty and what the Federal Reserve managed to do was add a huge serving of uncertainty to markets. Before this (the rates decision) they had a clear criteria, it was clear what should trigger the first rate hike. But now they’ve talked about market volatility, they’ve talked about China, they’ve talked about commodities. That’s a host of things that people have to watch so that adds to uncertainty.” Kelly says the thing that everyone’s missing is that “the first few rate hikes actually stimulate economic growth and the big problem we have right now is by keeping rates so low the Fed is in many ways helping subdue the economy.” Watch the video here: (VIEW LINK)

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