Powell is patient but markets aren’t, challenging new Fed policy

AFTER Federal Reserve chair Jerome Powell (pic) spent two days telling US lawmakers the economy is in no state to be thinking about monetary tightening, financial markets on Thursday suddenly started pricing in a rapid – and perhaps too-hot – recovery.

The axis of tension is the new policy framework the Fed put in place last year. It dictates the central bank won’t raise interest rates early on in the recovery and will intentionally overshoot its 2% inflation target – maybe for years, while testing the limits of a hot jobs market.