From the desk of Willie Delwiche.
This week’s FOMC meeting has received more than its fair share of attention.
Many are no doubt tired of hearing about it. Some might even mentally paraphrase Thomas Jefferson (in Lin-Manuel Miranda’s Hamiliton): Can we get back to prices, please?
Yes, in just a moment.
Yesterday’s headlines announced that the “Fed doubles pace of tapering”. Unless you are paying close attention, this probably seems like confusing doublespeak. My friend Joe Kalish (at NDR) put it more succinctly, “Fed Turning Off Liquidity Spigot Sooner.”
The Fed will end asset purchases early next year. Based on current expectations, this will be followed by three 25 basis-point interest rate hikes over the remainder of 2022. Powell was clear to emphasize that this pivot, while compelled by higher than expected inflation, has been made possible by improving labor market conditions and strength in the overall economy. That messaging probably helped stocks shake off early weakness yesterday and rally into the close.