Former US Treasury Secretary Steven Mnuchin warned market watchers not to exaggerate the actions of the Federal Reserve (Fed).
Reflecting on the situation a year ago, Mnuchin said market watchers underestimated the risks to the economy.
However, now they are too worried about the threat posed by inflation and aggressive tightening by the Fed.
Mnuchin said his view is that the market is now overestimating those risks where suddenly everyone is very negative about the impact.
The Fed has led global central banks in tightening monetary policy this year in the fight against soaring inflation.
However, what is a concern is that efforts to reduce inflation may have a major impact as higher rates may slow down business activity and affect the economy.
As of September, the Fed has raised rates five times bringing the benchmark interest rate to the 3%-3.25% range.
Markets now see interest rates reaching 5% in the first half of 2023, signaling the Fed will continue to be aggressive in tackling inflation.
