Even if there were a bubble, they argued, these were problems best dealt with through targeted bank regulation rather than using the blunt instruments of monetary policy. Triumphant traders piled back into the market, confident the Powell Fed had been whipped into submission. That’s one of the well-recognized channels through which monetary policy is supposed to work. Monetary policy now requires the Fed to use all of its powers to tame the excesses of financial markets. And that can happen only if the markets are more afraid of the Fed than the Fed is of the markets.

Source: Washington Post May 03, 2019 20:22 UTC