Fed Chair Kevin Warsh Testified to Congress That the Fed Has "Only a Target, and It's 2%," Rejecting Any Soft Inflation Goal. What Does That Mean for Rate-Sensitive Stocks?
Kevin Warsh is sticking to his guns, and that could mean vastly more uncertainty for some companies.
Overview
The Federal Reserve's purpose is two-fold. On the one hand, it attempts to keep goods prices stable, which effectively means keeping inflation in check. On the other hand, it attempts to maintain full employment. These two goals can be at odds at times, as strong growth boosts employment but can lead to higher inflation. That said, since the turn of the century, the Fed has provided the market with the so-called "Fed put."
New Fed chairman Kevin Warsh is quickly making good on his promise to end the Fed put, with material short-term and long-term implications for rate-sensitive stocks.
Image source: The U.S. Federal Reserve.
Details
Source
Originally published at www.fool.com.