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Surging Inflation May Force US Fed to Resort to Yield Curve-Control
The Federal Reserve is at risk of getting schooled in a classic adage: Be careful what you wish for. Daniel Tenengauzer, head of markets strategy at Bank of New York Mellon Corp., is warning that if inflation gets hotter than the Fed’s new policy is aiming for, it may trigger widespread bond selling that ripples throughout other markets. That may force the central bank to adopt a tool to cap long-term yields -- known as yield-curve control, or YCC, he says. The latest reading of consumer prices to be released Wednesday is supposed to show a still tepid pace of inflation, and the Fed’s preferred measure holds well ... (full story)