Fed Day and the Fallout (fall-up?)
The Federal Reserve did just what we all expected: they doubled the pace of the taper such that the central bank will stop buying Treasuries and mortgage-backed securities by March and pulled rate hikes forward. Comments in recent weeks from Jerome Powell and others on the Federal Open Market Committee that decides on monetary moves had prepped the market for all of this. While we never know about a hike until it happens, today’s FOMC tries to prep the market for such moves through its speeches and its dot plots.
Today’s meeting produced a new dot plot and, yes, it pulled rate hike timelines forward. All of the 18 members of the committee said they could see the case for at least one rate hike next year, a noticeable change from September’s meeting when the committee was split 50-50 on any hiking in 2022. The median voice on the committee sees three 25-basis point hikes in 2022.
Whether these projections actually come to be is another question entirely. The Fed does not want to be blamed for causing a recession. The stock market is so important now, at least in perceptions of economic strength, that fear of causing a
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