Why Traders Are Angry: “The Fed Is Modeling Distortions It Helped Create”

from Zero Hedge

Must read thoughts from Richard Breslow, a former FX trader and fund manager who writes for Bloomberg

The Federal Reserve Bank of San Francisco released a paper yesterday with a decidedly dour take on why market measures of inflation expectations remain in the tank. It’s a very relevant debate to have for several reasons.

It contradicts, or at least introduces important additional challenges, to the explanation made by Fed Chair Yellen in her already dovish speech just last week. More importantly, rate hikes won’t be more than symbolically attempted until the Fed gets a lot more comfortable with the issue, or decides to assume it away.

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