UBS: A substantial shift in Federal Reserve Chairman Warsh's policy reaction function, becoming more sensitive to financial conditions and less sensitive to the labor market.
UBS's report assesses a substantial shift in Federal Reserve Chair Warsh's policy reaction function compared to his predecessors: greater sensitivity to financial conditions, less sensitivity to labor market impacts, and a higher threshold for "restrictive monetary policy." Warsh disclosed at the press conference that a strong labor market, concerning inflation trends, and geopolitical developments and their impact on energy prices were the main logical supports for this rate hike.
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