A Higher Nominal Growth World Brings Higher Volatility, Says Jim Caron

Jim Caron highlights how a shift toward higher nominal growth is creating increased market volatility and uncertainty about the Fed's policy direction. The central bank faces conflicting pressures: some argue for a September rate hike to restore inflation-fighting credibility under Chairman Kevin Warsh, while others believe inflation is already declining and the Fed should maintain its current course. The Fed's response to upcoming inflation data will be critical in resolving this policy debate.