Why has the US Fed turned away from interest rate rises? | Nouriel Roubini

Stalling inflation and a need to show independence have pushed it to a dovish stance

The US Federal Reserve surprised markets recently with a large and unexpected policy change. When the Federal Open Market Committee (FOMC) met in December 2018, it increased the Fed's policy rate to 2.25%-2.5%, and signalled that it would raise the benchmark rate another three times, to 3%%-3.25%, before stopping. It also signalled that it would continue to unwind its balance sheet of Treasury bonds and mortgage-backed securities indefinitely, by up to $50bn (38bn)per month.

But just six weeks later, at the FOMC meeting in late January, the Fed indicated that it would pause its rate rises for the foreseeable future and suspend its balance-sheet unwinding sometime this year.

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