FedFaces Balancing Act as Bond Yields Whipsaw on Rate Hike Outlook
-
Bond yields have helped keep inflation in check but their decline recently took pressure off the Fed to raise rates.
-
Lower Treasury yields translate to lower rates for mortgages, credit cards, etc., counteracting the Fed's inflation fight.
-
Powell said the Fed may need to tighten policy further if appropriate to control inflation.
-
His hawkish comments sent yields back up as investors predicted a rate hike at the December meeting.
-
The Fed faces a challenge responding to bond market tightening without undoing it and signaling more hikes are off the table.