Federal Reserve Chair Jerome Powell's speech Friday at the annual Jackson Hole forum was consistent with his very gradual and highly measured approach to policy changes—an approach that financial markets love, as it implies a longer period of very loose liquidity that fuels ever-higher asset prices. The real question, however, is whether the speech will end up being out of touch with actual economic and financial developments as they unfold over the remainder of this year and beyond.

By refraining from breaking new ground or providing operational details of any evolution in policy, both of which would have inevitably tilted more hawkish at this point, Powell gave investors more reason to take stocks and bonds higher. And indeed, stocks rallied to a new record while bond prices also rose.

Economists, however, seemed less convinced by the argumentation, the stated outlook, and what it implies for the Fed's go-slow policy evolution that markets like so much. More concerned about the two-sided nature of the inflation risk and the potential for a policy mistake, some would have favored a firmer signal about an imminent taper of the Fed's large-scale asset purchases, something that I have argued is not just needed for both economic well-being and longer-term financial stability, but is also overdue.

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