Paper explains why ‘Fed put’ is not as reliable as investors might like
Disagreement between Fed and market can create perception central bank is “behind the curve”
New research outlines a mechanism that helps explain why the US Federal Reserve sometimes seems to act to support financial markets, and other times destabilises them.
The research explores the famous “Fed put”, originally named for the policies of chair Alan Greenspan. Under Greenspan, the Fed seemed to step in to support financial markets every time they wobbled. Some observers have since said the Fed’s intervention to support markets in the wake of the 2008 crisis and the Covid crisis are
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