Is The Fed Manipulating The Market?

Source: Cobden Centre
by Bryan Cutsinger

“Some critics of the Federal Reserve argue that central bankers manipulate the market whenever they adjust interest rates. For example, in an article in the Wall Street Journal, monetary economist Judy Shelton writes, ‘When the Fed tightens by raising interest rates, its goal is to increase borrowing costs.’ She contends that the Fed’s approach is mistaken: ‘Interest rates shouldn’t be used to depress economic activity, but rather be allowed to signal where best to pursue it.’ While Shelton’s view of letting the market determine interest rates is intuitively appealing, it represents a fundamental misunderstanding of monetary policy.” (05/28/24)