Fed minutes December 2021:

The Federal Open Market Committee on Wednesday released minutes from its Dec. 14-15 meeting.

As expected, the Federal Reserve’s policymaking group kept its benchmark interest rate anchored near zero. However, officials also indicated that they foresee up to three quarter-percentage-point increases in 2022, as well as another three hikes in 2023 and two more than the year after that.

In addition, the committee announced it would speed up the tapering pace of its monthly bond-buying program. Under the new plan, the program would now end around March, after which it would free up the committee to start hiking rates.

Current fed fund futures market pricing is indicating about a 2-to-1 chance of the first hike coming in March, according to the CME’s FedWatch Tool. Traders figure the next increase would come in June or July, followed by a third move in November or December.

Fed officials indicated that the reasoning behind the moves was in response to inflation that is higher and more persistent than they had figured. Consumer prices are rising at their fastest pace in nearly 40 years.

Policymakers also discussed when they might start reducing the Fed’s $8.8 trillion balance sheet, which has more than doubled since the beginning of the Covid pandemic.

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