New York( CNN Business) The Federal Reserve’s rate hikes steal all the headlines. But behind the scenes, the Fed is conducting a $4.5 trillion experimentation. And it’s unsettling world financial markets.
Although economists debate the effect on the real economy, QE acted like a turbo booster for the stock market.
In October 2017, the Fed decided the economy was eventually healthy enough to start shrinking its $4.5 trillion balance sheet. So-called quantitative tighten accelerated to $50 billion a month in the fourth quarter of 2018 — precisely when marketplace volatility spiked.