Forget Fed Rate Hikes. How It Handles Its $9 Trillion in Assets Is What Really Matters.


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Federal Reserve Board Chairman Jerome Powell, shown late last year at a House hearing, faces some big policy decisions this year.


Brendan Smialowsky/AFP/Getty Images

If there is one takeaway from another muddled jobs report, it’s this: The Federal Reserve is behind the curve and falling fast. Investors should brace for more aggressive tightening—and even welcome it.

As was the case in the prior month, the headline nonfarm payrolls figure for December belies a report that reflects a stubborn, ongoing labor shortage that is fueling inflation. Millions of workers continue to defy expectations for a mass return to work, with labor-force participation stuck well below prepandemic levels. And…


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