Will Investors go along with a weaker ‘Fed put’?

Policy actions: The Fed building in the US capital. While the Fed has a window to deliver an orderly policy normalisation, there are reasons this opening is uncomfortably tighter. — AFP

MANY have viewed the pullback in markets this week, including the sharp fall in the Nasdaq, as a reaction to the release of minutes from the Federal Reserve’s (Fed) December policy meeting that were more hawkish than expected.

That raises two interesting issues for markets and the economy: Why were investors taken by surprise, and what are the implications for future price moves?