Things couldn't be much better when it comes to the central bank's twin goals of maximum employment and stable prices: Unemployment is at a 48-year low, and inflation is hovering near the Fed's 2 percent target. This performance is even more impressive given that it's come as the Fed has been scaling back policies that boost the economy: Powell & Co. have been steadily raising rates and slowly shrinking the central bank's massive bond holdings, effectively withdrawing dollops of liquidity. So far that's gone well, despite fears that the never-before-tried preplanned bond drawdown-which has already slashed holdings by more than $350 billion-would trigger widespread eruptions in financial markets.
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