Insight - Markets could get much uglier if Fed has to choose

Precautionary measures: The Fed building in Washington. Chairman Powell openly admitted this week that the pain may be inevitable as the central bank gets inflation back down. — Reuters

IF the United States Federal Reserve (Fed) were to take its political cue at face value and focus solely on putting inflation back in its box, already battered financial markets could get much uglier and investors don’t appear prepared for it.

While the decision is never that clear cut for Fed policymakers with dual price stability and full employment mandates, there’s little doubt the Fed and other Western central banks are under enormous public pressure to prioritise control of the worst cost of living squeeze in 40 years.