Fed Silence Sparks Fear of Economic Volatility

A prominent economist at Moody's Analytics has expressed concern that the Federal Reserve's silence on future interest rate hikes could put the economy at risk.

Mark Zandi, chief economist at Moody's Analytics, stated that the Fed's reluctance to provide forward guidance or explain its reaction function is a 'serious mistake' that may lead to more volatility in bond and stock markets.

This could result in rising long-term interest rates and a wobbly equity market. If the Fed continues down this path, a future meeting could trigger a serious market sell-off, putting the broader economy at risk, Zandi warned.

The Federal Reserve's next policy meeting is scheduled for mid-September. Investors have begun pricing in at least one rate increase before the end of the year, with odds standing at 30.8% according to CME Group's FedWatch tool.