Fiscal easing without monetary offset?

Week ending Friday October 20th 2017 Fascinating tensions playing out in markets. Undoubtedly, the biggest driver of market movements was the progress towards a big tax cut in the US Senate with seemingly little offsetting spending cuts in prospect. Normally such a deficit-raising, unbalanced outcome would drive an offsetting tightening of monetary policy. This time the tax cut is being played out against a background of leadership change at the Fed that leaves the Fed response uncertain. Does Trump understand monetary offset and is seeking to prevent it with one of his famous deals? Obviously not. Could it be an…

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