Fed's George: Market Selloff 'not All That Unexpected' Nor 'worrisome'

The recent stock-market selloff "is not all that unexpected" nor "necessarily worrisome" as investors were naturally going to readjust the pricing of risk in the wake of the December's interest-rate hike, said Kansas City Fed President Esther George, on Tuesday. "Monetary policy cannot respond to every blip in financial markets," George said in a speech on the economic outlook at the Central Exchange in Kansas City. There has been no "substantial shift" in the outlook that would justify pausing further gradual rate hikes, she said. While there are risks to the economy from the energy sector, elevated inventories and the global economy, George discounted fears of a U.S. recession, saying the economic fundamentals remain strong and core inflation measures have recently picked up. George, one of the most hawkish of the regional Fed presidents, is a voting member of the committee this year.