NEWS: The Fed's fulcrum stems from volatility, failures and new economic realities.
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In January, the Federal Reserve pledged to be "patient" with further interest rate hikes, shelving three years of policy austerity and calming the market after weeks of turmoil that strangled trillions of dollars in households.
But interviews with more than six policymakers and others close to the process show that this also marks a more fundamental shift, defining the term of chairman Jerome Powell as the first time the Fed has fully embraced a world of stubborn inflation and long-term slowdown in economic growth. Permanently lower interest rates.
With Powell's public comments, Federal Reserve minutes and other documents, and the central bank's review of how to do business according to new realities, the central bank has entered a potentially difficult period of change. For example, one question is whether crisis policy is part of a daily toolkit. Another question is whether to try to make the public accept higher inflation from time to time.
Policymakers have been debating for years how traditional central banks adapt to the world changed by the global financial crisis a decade ago. But Powell made a brief comment on October 3, triggering a series of events that helped solve the problem.