Understanding the Fed's dovish turn

Nouriel Roubini | Roubini Macro Associates | 19 March 2019

The US Federal Reserve surprised markets recently with a large and unexpected policy change. When the Federal Open Market Committee (FOMC) met in December 2018, it hiked the Fed’s policy rate to 2.25% to 2.5%, and signaled that, before stopping, it would raise the benchmark rate another three times, to 3% to 3.25%. It also signaled that it would continue to unwind its balance sheet of Treasury bonds and mortgage-backed securities indefinit...