Fed will aggressively dial back its monthly bond buying, sees three rate hikes next year
$SPDR S&P 500 ETF(SPY.US$ $Invesco QQQ Trust(QQQ.US$ $SPDR Dow Jones Industrial Average Trust(DIA.US$
The Federal Reserve provided multiple indications Wednesday that its run of ultra-easy policy since the beginning of the Covid pandemic is coming to a close, making moves that were even more aggressive than markets had anticipated.
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, probably around March, 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.
Both moves came in response to escalating inflation, which is running at its highest level in 39 years for consumer prices. Wholesale prices in November jumped 9.6%, the fastest on record in a sign that inflation pressures are becoming more ingrained and broad-based.
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Cully : So with news on increased tapering and interest rate hikes both confirmed, the market starts increasing?
Enlly : more often than not, the best case for the stock market is removal of a negative news. with the fed announcing this, it removes a negative forecast which is usually good for the stock market since weve seen a correction anticipating for the worst