Fed will aggressively dial back its monthly bond buying, sees three rate hikes next year

Fed will aggressively dial back its monthly bond buying, sees three rate hikes next year

The Fed will be buying $60 billion of bonds each month starting January, half the level prior to the November taper and $30 billion less than it had been buying in December. The Fed was tapering by $15 billion a month in November, doubled that in December, then will accelerate the reduction further come 2022.

After that wraps up, in late winter or early spring, the central bank expects to start raising interest rates, which were held steady at this week’s meeting.

Projections released Wednesday indicate that Fed officials see as many as three rate hikes coming in 2022, with two in the following year and two more in 2024.

“Economic developments and changes in the outlook warrant this evolution of monetary policy, which will continue to provide appropriate support for the economy,” Chairman Jerome Powell said at his post-meeting news conference.

 

They ain't raising rates. Utes at the highs.

 

They think they might raise rates next year.

Next year rolls around.

No rate increase.

Learn the game bruh.

 

Full employment and price stability are looking more and more like a moving target with the Fed.
I think they are rolling the dice that inflation goes down as quick as it went up, and they could be right. But if they are wrong, you could have rate increase while they are still tapering.

 

It will never be enough. Powell is no Paul Volcker.

 

The market response tells you all you need to know - low interest rates forever.

 

I wonder why Powell is warning about cyber attacks. Something is up.

 

I will repeat what I wrote before at one point. Interest-rate raising does NOT automatically start after the end of bond-buying. Feb will only raise the interest rate when it's absolutely warranted according to the economic situation at that time. If the economy at that time is bad, god forbid, if it's in recession, then there is no interest-rate raising. Nothing is automatic. People really need to understand this.

 

0.75% raise hardly changes anything in the bigger picture when we are at 0.25%. The tapering was a non-issue; Canada ended theirs months ago. I can't imagine any corp or investor changing what they do because prime is 1%. Especially when the banks are not keeping up with GIC rates.

 

My question is - can inflation be contained without slowing the rise in asset prices? Do they need to gently deflate the markets?