5min chapter

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Joseph Wang & William White: Mammoth Interest Rate Hikes Are Causing Trouble In Sovereign Debt

Forward Guidance

CHAPTER

The Fed and Central Banks Should Be Careful With Quantitative Tightening

Dr. White: Why is winding down the balance sheets, letting up to $95 billion of securities sort of fall off from the Federal Reserve balance sheet something that central bankers should be careful with? He says there's just so many signs of stress inside the markets. And we've seen all of these flash crashes,. We've got anomalies in the system, where sort of normal arbitrage conditions like covered interest parity hasn't applied for years. So you have the sort of sense really almost of an accident waiting to happen.

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