Minutes from the Federal Reserve’s policy meeting in December points to a faster timetable for raising interest rates this year, possibility as soon as in March.
- Fed officials believed that rising inflation and a tight labor market could push for raising short-term rates more at a faster rate than earlier anticipated.
- Some officials called for Fed to start shrinking its $8.76 trillion bond portfolio and other assets soon after starting to raise rates.
- The stocks immediately fell after the minutes were released on Wednesday afternoon. The Dow Jones Industrial Average dropped 1.1% as the Nasdaq Composite Index plunged 3.3%.
- Meanwhile, government bond yields increased. CME Group noted that the trading in interest-rate futures markets signaled the nearly two-thirds possibility that Fed would raise rates in March.
Most Fed officials expect at least 0.75 percentage-point rate hikes this year. In September, nearly 50% of the group thought rate hikes could wait until 2023.
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Source: Federal Reserve