Regardless of their cause and contour, when faith is undermined, the resulting fear and ambiguity can accelerate the deterioration in economic performance. Some key articles of faith have been undermined with respect to some financial institutions. And that is as it should be. Risk-management failures at some large, systemically significant financial institutions are now legendary.
Although this judgment may well have implications for policy should the risks be realized, it is investors who appropriately form their expected path of short-term interest rates from this and other parts of the announcement, along with a variety of other information.