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Notes From The Desk | FOMC Meeting Dec 15 2021

In the land of the bald eagle, the hawks have begun to emerge.

· With inflation showing little signs of slowing down, the Federal Reserve has sent a strong signal that they are taking the situation seriously.

· The Fed has accelerated the pace of tapering, such that QE should end by mid-March 2022.

· This opens the door to rate hikes, with FOMC members expecting three hikes in 2022, and two in each of 2023 and 2024

None of this came as a surprise, as most bond market participants expected them to take these steps given the recent inflation and employment data.

Barring negative economic shocks, the upward pressure on interest rates should persist well into next year.

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