What the Fed Will Do This Week — and Why

None of this should constitute major market-moving developments in the short term. But behind the scenes, the Fed will continue to deal with an unusual degree of economic uncertainty and fluidity. This includes the factors associated with the basic understanding of today’s wage dynamics, inflation determination and productivity patterns. As such, there will be a lot of underlying work on key policy parameters for the longer term, including the specification of the neutral rate, the approach to containing the risk of future financial instability, the threat of greater political interference, and the assessment of market yields that are now heavily influenced by developments in Europe.

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