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The Downside of the Fed’s Increasingly Complicated Expectations Game

Harvard Business Review

When you view this reaction in terms of expectations, it makes a bit more sense. Consider what happened in the mid-1990s, when the Fed raised short-term interest rates sharply in order to stamp out what it perceived as a possible overheating of the economy. It] elevated the long-term asset value expectation.”.

Bond 8
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What Alan Greenspan Has Learned Since 2008

Harvard Business Review

But it is impossible for the majority of participants in the market to call the date when it blows. But when that deflation occurs, it requires a point at which the vast majority of market participants do not expect it to happen. If everyone were wholly rational in their long-term self-interest, there would be no political biases.