Gazillion Miles Behind the Curve, the Fed Gets Hawkish: More Rate Hikes, “Faster and Much Sooner” Quantitative Tightening

by Wolf Richter
Wolf Street

The strong economy and labor market can “handle tighter monetary policy.”

Folks kept saying for many months that the Fed is “trapped,” that it can never raise interest rates, that it can never end QE, that it can never-ever shrink its balance sheet. And now the Fed has ended QE, and it has hiked its key policy rates by 25 basis points today, and it indicated that rate hikes are on the table at every meeting this year – seven more – and that there’s “certainly a possibility” that this might include 50-basis-point hikes, Powell said, and that the details of the balance sheet shrinkage (Quantitative Tightening) could be announced “as soon as” at the next FOMC meeting in May, Powell said, and that the balance-sheet shrinkage will be “faster and much sooner” than last time.

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