David Wessel:

Right.

My guess is that they — I don't know, but I guess they were a little surprised by how much the market dropped today. I think they were trying to be measured in the way that central banks are.

And what happens is, the Fed looks at financial conditions generally, and when the stock market falls as much as it has — it's fallen about 8 percent so far this month — that means that people who own stocks have less money, spend less readily, businesses will be less likely to invest, and people generally get more anxious.

That acts as a brake on the economy, and the Fed knows that. So, they — that almost substitutes for an interest rate hike. So they can afford to be patient on interest rate hikes because the market is tightening for them.

But we really don't know what will happen tomorrow. The market could be up 500 points tomorrow. So, they can't aim at the market. They're trying to aim at the economy.

And I think one difference between the Fed and some of the people who follow this stuff is, does the market see something that the Fed doesn't? Is the market telling us that the economy really is slowing down or that President Trump's trade war is really doing damage to the economy?

They don't seem to be very focused on the market as a predictor of the economy.