The Fed Does NOT Know Better Than The Market. Here’s Why

The Fed gauges conditions in financial markets, and the markets try to predict the Fed - is this not a circular reference?

Of course, if the Fed can prove that it has the ability to better predict the future than the bond markets it closely follows, then the central bank should take all the time it needs before changing its policy stance.

However, as the financial crises of 2008 and March 2020 so painfully show, the Fed does not know more about the future than everyone else.

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