Jeremy Stein, in one of his last speeches as a Federal Reserve governor, warned that the central bank still may face more bouts of market volatility as it winds down the most aggressive easing in its history.
Some investors may be “underestimating the degree of uncertainty about the future path of policy and are placing levered bets accordingly,” Stein said yesterday in a speech to to the Money Marketeers of New York University. “So we may have some further bumps in the road as this all plays out.”
Stein cautioned that while small and predictable steps often are the best approach to monetary policy, managing expectations too carefully could backfire as policy makers taper bond buying and prepare to eventually raise rates for the first time since 2006. The Fed has slowed purchases in $10 billion increments over the past four meetings to $45 billion a month.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.