Dario Perkins, a senior economist at TS Lombard, contends the Fed has effectively outsourced control of when to raise interest rates to bond markets. If so, he argues in a new report, the Fed is unlikely to raise rates as much or as many times as the central bank has indicated. “This is an odd situation because it suggests central banks are now ‘rate takers’ rather than ‘rate setters,’ ” he wrote. Only a sharp rise in inflation itself or inflation-adjusted bond yields, he added, will force the Fed to be more aggressive.
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