On August 5th, the S&P 500 experienced a record close after the U.S. Federal Reserve’s latest meeting, which included no policies against inflation. CNBC’s Closing Bell Market Zone spoke with Axonic Capital Director of Research Peter Cecchini for insight on whether he believes the U.S. Federal Reserve is risking making a policy mistake or if they have things perfectly under control, justifying the equity markets’ continued rally.
“If history is any indication, the Fed is rarely proactive when it comes to things like inflation,” Cecchini says. “I think the risk of policy mistake is rather high here.”
He explains that he believes this time is different than prior inflationary episodes because the Fed has quantitative easing (QE) at their disposable, which is really in control of the entire yield curve.
“I think the risk is rather great that the Fed is waiting too long to taper,” Cecchini explains. “Then at some point, as the numbers bleed a little more and it’s clear that companies are struggling to push through costs, the Fed will sort of be forced if you will to act.”