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Former Fed advisor says the central bank shouldn't comment on equities

Federal Reserve officials commented on the stock market in March, as minutes from the Federal Open Market Committee meeting revealed the central bank is working to reduce its $4.5 trillion in bonds on its balance sheet this year.

Danielle DiMartino Booth, a former Dallas Fed advisor and president of Money Strong, said on CNBC's Power Lunch on Monday, "It always makes me uncomfortable," when the central bank comments on U.S. equities.

In the summary of the March meeting, Fed members "commented that the recent increase in equity prices might in part reflect investors' anticipation of a boost to earnings from a cut in corporate taxes or more expansionary fiscal policy, which might not materialize. They also expressed concern that the low level of implied volatility in equity markets appeared inconsistent with the considerable uncertainty attending the outlook for such policy initiatives."

"I don't think it's necessarily the purview of central bankers to comment on this," DiMartino Booth said.

She said the Fed's comments on the market shows "they are also verbally concerned about financial instability," and may consider it when the Fed makes fiscal policy decisions, in addition to labor and inflation mandates.

David Nelson, chief strategist at Belpointe Asset Management, agreed, "I don't think the Fed should be commenting on stock prices."

Nelson added, "The elephant in the room has been the balance sheet. It has been for some time."