Federal Reserve Monetary Policy Update - Speeds Up Taper, Signals Rate Hikes: CareEdge
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CareEdge Research Report
At the eighth and final policy meet for 2021, the Federal Reserve announced that even as it kept policy rate unchanged it would further reduce its monetary stimulus by scaling down its monthly asset purchases (to $60 billion), effectively bringing it down to half the original amount ($120 billion).
With this, the central bank is likely to wind down its asset purchase programme by March’22. The faster withdrawal of asset purchases sets the stage for interest rate hikes if price pressures prevail.
The Federal Open Market Committee members have signalled interest rates hikes in the coming two years, with three in 2022.
The target interest rates or federal fund rate could rise from the current 0% - 0.25% range to 0.9% in 2022 (based on the majority of FOMC participants).
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