Federal Reserve Governor: Excessive Emphasis Should Not Be Placed on Financial Market Strength When Assessing Monetary Policy Stance
BlockBeats News, November 3rd, Federal Reserve Governor Smilan stated that it is inappropriate to overly emphasize the strength of the stock market and the corporate credit market when evaluating monetary policy. He believes that the current monetary policy is still too tight, increasing the risk of an economic downturn. Smilan stated in an interview: "The financial markets are driven by many factors, not just monetary policy."
He used this explanation to justify why last week, when voting on a 25BP rate cut in the first quarter, he opposed a 25BP cut and leaned towards a 50BP cut. He pointed out that in interest rate-sensitive industries such as the housing market performing poorly and some private credit markets experiencing pressure, factors such as rising stock prices and narrowing corporate credit spreads "may not necessarily tell you what the monetary policy stance is." (FX678)
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