Why investors should be worried if Powell blinks early on rates

Ever since the US federal funds rate reached 5.5 per cent in response to generationally high inflation, we’ve expressed concern about the risk of a policy error should the US central bank blink by prematurely easing policy before the inflation threat is fully vanquished.

This is what occurred during the 1970s when the Arthur Burns-led US Federal Reserve – either through miscalculation or losing its nerve – lowered rates before the job was done, thus unleashing a second and even more fierce, inflationary wave.

Source: https://www.afr.com/markets/debt-markets/why-investors-should-be-worried-if-powell-blinks-early-on-rates-20250809-p5mlnx