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The Federal Reserve’s insurance policy

Financial Times   •
©The Financial Times Limited 2020 Sep 30, 2024 / 12:59 PM IST
All Rights Reserved. FT and Financial Times are trademarks of the Financial Times Limited Not to be redistributed, copied or modified in any way.

Its beneficial impact comes with the usual trade-off of generous insurance risking high moral hazard and adverse selection. Specifically, markets have translated this as signalling a low risk of inflation resurgence and disorderly financial instability

It should come as no surprise that many economic reasons have been put forward for the Fed’s aggressive cycle start.

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