The US Federal Open Market Committee (FOMC) missed the perfect opportunity to keep markets on alert by sitting pat last week. Markets become complacent when the element of surprise is no longer an issue.

There was sufficient positive economic data on hand for the committee to move--3Q GDP growth of 3 per cent, 13-year high consumer confidence, and a strong October ADP private sector jobs report among others.

With market expectations high for a 25-point hike at the 12-13 December meeting, what's 30 or so days between friends? What would derail this almost locked-in decision in the meantime?

It says little about the underlying confidence and conviction in the economy despite continued references to it being "solid". The independent Fed must not be led by markets and should start its manoeuvring to get "in front of the curve" without being coerced by financial markets or politicians.

The transition from Janet Yellen to Jerome Powell as the chairman of the Federal Reserve passed almost without notice, unless you were either Janet Yellen or Jerome Powell. Both have a dovish bias, Powell having never voted against his chair in her four-year post.

But President Trump created a milestone by not extending Yellen's term despite her being prepared to serve, the first time this has happened in over 80 years. Janet Yellen is a Democrat and a Barack Obama appointee.

Trump wants nothing to do with the previous administration. Powell is a Republican and his appointment could add fuel to those suggesting greater politicisation of the Fed.

The financial markets treated the transition from Yellen to Powell as the status quo, with bond yields edging lower. Powell now needs to manage the balancing act of tightening monetary policy by operating dual levers of interest rates and liquidity-sapping bond market transactions.

In previous monetary tightening episodes, the Fed has not had to worry about its balance sheet. While interest rate policy will be closely monitored and will have a greater profile, it will be the management of liquidity that may be of greater importance and demand closer examination.

Traditionally, liquidity was cash and liquid assets. In a post GFC era, liquidity is not only cash and liquid assets but also includes access to liquidity or credit, usually in the form of bank facilities. I urge a focus on the latter, as it relies on the behaviour of banks and they can be fair weather friends.

Ask Wesfarmers about the certainty of the bridging loans that were in place to fund the Coles acquisition. Wesfarmers (ASX: WES) has been rightfully gun shy of Australian banks ever since.

The liquidity provided by the central banks in the wake of the GFC has, after a long and at times torturous period, delivered economic growth, although inflation has failed to respond. Almost all sectors have, to varying degrees, relied or become dependent on this unparalleled level of liquidity. Just how dependent will be revealed in the ensuing years.

The withdrawing of liquidity can cause a squeeze on credit and the central banks must be careful not to slip up as they have little ammunition to defend another economic contraction. Jerome Powell is not an economist.

While there is a modicum of synchronisation in economic growth, particularly in the northern hemisphere economies, there is an absence of it in terms of central bank policy.

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Peter Warnes is Morningstar's head of equities research. Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar.

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