The notion of three rate hikes in 2022, according to Tom, is a bit more hawkish than expected, but it seems the market is okay with it.
The market doesn't expect the Fed to be more aggressive because only two officials expected four rate hikes next year. Many people still expected two hikes. "I think the market sees that next year it could be two, it could be three as well but it's not going to be any more than that."
The market believes the Fed will not take anything too far. It's going to change policy with a focus on inflation.
atti Domm
Chris Rupkey is the chief economist at FWDBONDS.
The Fed officials made their last forecasts at the September meeting and all of a sudden they are looking for three rate hikes in 2022. Inflation is no longer a fleeting phenomenon and they have to bring out the fire hoses to keep the fire from spreading. Will it be enough?
John Melloy is a person.
The Federal Reserve's statement is a sign that the policy is not in line with the Fed's intentions, said Mark Cabana, head of U.S. short rate strategy at Bank of America.
The acceleration was expected. He said that the economic projection shifted and the dot plot is what's really hawkish. We thought they would only have two hikes next year because of the commentary that was being said before the meeting. They came out with three and a comfortable three.
The central tendency for core inflation will be 2.5% to 3% next year, up from 2% to 2.5% in the Fed's forecast.
He said that the futures market gave a 50% chance of a rate hike in March and a 90% chance in May.
I'm surprised that equities are increasing on the back of it. I think the Fed can regain control of the inflation narrative.
The person is Patti Domm.
The Fed's announcement shows how comfortable the central bank is with the economic recovery, according to Mike Loewengart, managing director of investment strategy at E-Trade Financial.
"This could mark a turning point in the business cycle as we're actually seeing a market cheering the Fed's vote of confidence in the economy, as opposed to running higher on stimulus, which it's been doing for the past year and a half," he said.
The three rate hikes for '22 projected by the dot plot likely raised more than a few eyebrows, but that would still keep us within the realm of historically low rates, and further the market often moves positively when it has a clearer picture of the future, which the Fed.
Yun Li.
The Fed signaled multiple rate hikes are on the way, but big banks were lower. The Fed's actions boosted short-term rates more than long-term rates, thus narrowing the spread. When the yield curve widens, banks make money by borrowing at short-term rates and lending out at long-term rates. Bank of America shares lost 0.4%. Citigroup shares fell.
John Melloy is a person.
Frederic Mishkin was a Governor of the Federal Reserve Board.
He said on CNBC's "Power Lunch" that the Fed is behind the curve. Inflation is much higher than they anticipated. It's more permanent than they thought.
I think it's a mistake to not be prepared. We're not going to raise rates until we see the whites of our eyes, which is that we're at full employment, and that may be too late," he said.
The person is Pippa Stevens.
Morgan Stanley Investment Management's Jim Caron thinks the Fed made some bad decisions.
The market is strong enough to handle three rate hikes and the known unknown becomes known. The uncertainty is removed from the market and we were already pricing in three rate hikes. They have to focus on earnings, margins and growth from an equity perspective. It's a sigh of relief for the market who thought it might be more aggressive. It's kind of what we were thinking.
atti Domm
The S&P 500, the Dow Jones Industrial Average and the Nasdaq were all up on Wednesday as investors digest the Fed's latest monetary policy announcement.
The S&P 500 was higher by 5.3%. The tech-laden index gained some ground.
Fred Imbert.
The Federal Reserve indicated on Wednesday that it sees as many as three rate hikes in the next four years.
The reopening of the economy has contributed to elevated levels of inflation because of supply and demand imbalances. Job gains have been solid in recent months, and the unemployment rate has declined substantially.
The Fed expects to raise rates twice more in the next two years.
Fred Imbert.
The Federal Reserve decided to dial back its monthly bond buying program. $60 billion a month will be bought by the Fed. That is half the level before the November taper. The central bank is expected to raise its rates three times in the next five years.
The major averages were lower as traders waited for the Fed's monetary policy announcement. At 1:40 p.m. The index was down about 44 points. The S&P 500 lost ground and the Nasdaq lost ground.
Fred Imbert.
The CNBC Fed Survey shows that respondents think the central bank will end its asset purchase program by March and begin to raise rates in June. The September survey showed respondents expected the first hike to be by the end of 2022.
Steven Blitz, chief U.S. economist atTS Lombard, said that the economy has jumped far ahead of Fed policy rates. The only hope is to raise rates and hope inflation goes down.
Fred Imbert.
The central bank is expected to move closer to a rate hike when it announces monetary policy minutes away. The end date for the Fed's bond-buying program is expected to be pushed back to March of next year from June of next year. If the Fed makes this move, it will free it up to start raising rates. Rick Rieder, chief investment officer of global fixed income at BlackRock, said that getting out of the easing business is very much needed.
The Fed's balance sheet could be a big wild card for the markets. Since January 2020, the Fed's balance sheet has grown to more than $8 trillion. At that time, it was $4.1 trillion.
Fred Imbert.
