Stein Endorses Feroli Warning That Fed Risks Market Tumult

Federal Reserve Governor Jeremy Stein endorsed a warning by economists that raising the main interest rate may cause a financial-market convulsion similar to the “tantrum” that occurred last year after the Fed said it was considering trimming its bond purchase program.

“Whenever the decision to tighten policy is made, then the instability seen in summer of 2013 is likely to reappear,” economists including Michael Feroli, the chief U.S. economist for JPMorgan Chase & Co. in New York and a former Fed economist, said in a paper released today. “Risks of instability have not been eliminated.”