Posted on 01/05/2022 4:44:21 PM PST by Browns Ultra Fan
Federal Reserve officials said a strengthening economy and higher inflation could lead to earlier and faster interest-rate increases than previously expected, with some policy makers also favoring starting to shrink the balance sheet soon after.
“Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated,” according to minutes published Wednesday of the Dec. 14-15 meeting of the U.S. central bank’s policy-setting Federal Open Market Committee, when it pivoted to a more aggressive inflation-fighting stance.
“Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes said.
The S&P 500 stock index extended declines following the release and was on track for its biggest loss in more than a month. Treasuries also extended losses and the dollar pared its decline.
At the conclusion of the December meeting, the FOMC announced it would wind down the Fed’s bond-buying program at a faster pace than first outlined at the previous meeting in early November, citing rising risks from inflation. The new schedule puts the central bank on track to conclude purchases in March.
And with the minutes released, the Down dumped.
And the 10-year Treasury yield jumped 5.3 bps on the release.
When Jerome Powell speaks, people listen.
(Excerpt) Read more at confoundedinterest.net ...
And home prices declining
That is a sign home prices have crossed above the affordability cirve.
Good.
I hope over the next 3 years Jerome Powell and the Central Bank get this “cheap money orgy” out of the system.
It has to be done, so young people can afford real estate & families.
Incremental interest rate hikes will put tremendous pressure on real estate & stock market valuations. Both those sectors are full of bloated speculative fat.
The diet is coming.
“Lean, mean, and efficient is what both those sectors will become.”
Problem is if FED is to raise interest rates commensurate with CPI, lets say to 5% for 10 year Treasuries, the annual interest payment on $30 Trillion will be about $1.5 Trillion. We already running budget deficits. So cut spending? Print more money?
There is no easy solution! Time for easy remedies is long gone.
“So cut spending? Print more money?”
They can do both, for all I care, but interest rates have to be higher, regardless.
“There is no easy solution! Time for easy remedies is long gone.”
You’re correct and many of the patients in the US economy, that have been babied and coddled aren’t going to like the medicine.
But Dr Jerome Powell is coming and they won’t have a choice.
I agree. I am ready to tighten my belt. How about the majority of Americans who are used to the easy life?
“I agree. I am ready to tighten my belt. How about the majority of Americans who are used to the easy life?”
Its going to be painful & necessary, but completely survivable. Plus they won’t have a choice, it “just happens.”
I’m 50 & you’re 81.
I use to drive my grandfather(1911-2002) and grandmother(1920-2016) up and the West Coast in their later years, so I listened to their stories and took notes about “tough times.”
I’m sure you have memories with your elders when you were a young man. Wisdom that you can pass on to the younger generations in your family.
People will react differently to stress, they always have.
He is a clown...nominated as a showman to keep the lay wall street people guessing. All Fed Chairpersons talk out of both sides of their mouths while nuancing every word in their releases. Woodrow Wilson and the Globalists put one over on American Citizens when they met and hatched the idea of the Federal Reserve. Not a US Department but “acts” as one.
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