The Fed announced a tight schedule, which is why the market “rage” has not yet arrived: Steve Hanke

Fed Chairman Jerome Powell announced Friday at the Jackson Hole Symposium that the U.S. central bank will consider shrinking by the end of the year as the economy is on track to meet full employment and meet targets Fed inflation.

The reason the stock markets did not react negatively to the announcement is that Powell’s speech is really quite obscure, if you read between the lines and conclude that they have not yet made any definitive plan to reduce it, said Steve Hanke , professor of applied economics at Johns Hopkins University.

Hanke noted that in the past, interest rates have risen before there is a reduction in asset purchases or a reduction in their downsizing, but this time the Fed does the opposite; they announce plans to shrink before making withdrawal commitments, which require stricter economic conditions, according to Powell’s speech.

“[Powell] think by changing the rule that we will not have a rage like we did in 2017. We will have it, because once they stop reducing the balance sheet and curbing the money supply, I think the markets will be completely unbalanced, ”Hanke told David Lin, anchor of Kitco News.

Hanke said global CPI inflation has not yet peaked at 5.4% and will in fact rise from 6% to 9% by the end of the year.

“I do not say [the Fed will] begin to shrink [by the time inflation climbs much higher]”I say they will start to panic,” he said. “At the end of the year, [Powell’s] the speeches will not include his statement that said inflation, we have addressed it, we have resolved it, ”he said.

For Hanke’s views on the news that Cuba now recognizes crypts as a form of payment, and his prospect of gold, watch the video above. Follow David Lin on Twitter: @davidlin_TV.