Hawkish Fed During Latest FOMC Meeting
Thursday 7th April 2022 – 07:07 (BST)
Minutes released from the Federal Open Market Committee (FOMC) meeting in March have shown many officials would have preferred a 50bps increase in the feds funds rate instead of the 25bps rise implemented.
They also showed that there was consensus for a monthly balance sheet reduction of $60 billion of Treasury securities and $35 billion of mortgage-backed securities – significantly higher than the $50 billion cap discussed last month.
The hawkish sentiment from policymakers comes against a backdrop of runaway inflation within the US. Consumer prices increased at the fastest pace in 40 years whilst producer prices also push higher due to rising energy costs.
The news immediately sparked an equity market sell-off as investors wrestle with the twin shocks of aggressive US interest rate hikes potentially causing a recession and more Western sanctions on Russia further stoking inflation.