The Federal Reserve delivered more than expected last week and in doing so changed the way investors will have to look at the economy, Goldman Sachs investment chief Jim O'Neill told CNBC.
Under normal circumstances, the central bank has what is known as a "dual mandate" — the responsibility of using monetary policy to ensure both maximum employment and price stability.
But the move to implement quantitative easinguntil unemployment stabilizes means the Fed, which announced the move Thursday, is focusing far more on jobs than it is worrying about the inflation that critics worry QE will cause, O'Neill said.
"They sort of did do the shock-and-awe," O'Neill, chairman of Goldman Sachs Asset Management, told "Squawk Box." "The Fed almost appears to have changed the balance of the mandate they're self-imposing, with a link to the unemployment decline."
He added that he really wasn't expecting the Fed to do much of consequence with a program that initially was nicknamed QE3, for the third round of easing, but which O'Neill and others are calling "QE Infinity" for its open-ended nature.
"If they weren't going to do something like that, it wasn't obvious to me that there'd be any more benefit of doing a QE," he said.
The upshot for investors is that the weekly jobless claimsnumbers the Labor Department releases on Thursday will become a highly important piece of information, he said.
The Fed indicated it will continue the asset purchases associated with QE on a monthly basis, so the claims figures could be the most immediate barometer for determining whether more easing is necessary. That number has been trending higher lately towards 400,000 — a yardstick many economists consider critical in determining the direction of the labor market.
O'Neill said the Fed can keep implementing its easing measures, which now will come mostly from purchasing mortgage-backed securities but could extend again to Treasurys, so long as inflationexpectations remain muted.
While gasoline prices have soared and food costs are high as well, the so-called core inflation measures, which strip out volatile energy and grocery prices, have been within the 2 percent annualized pace that the Fed considers acceptable.
"The Fed, even though many commentators and many political figures have gotten judgments of the danger of what they're doing, they have got the benefit (that) long-term inflation expectations are very stable," O'Neill said. "Real people appear to be of the view that there is not any great inflation consequences of what the Fed is doing."