Fed says it will begin multi-trillion dollar balance sheet wind-down in June, raises interest rates by a half point

..

*Tapering refers to the Federal Reserve policy of unwinding the massive purchases of Treasury bonds and mortgage-backed securities it’s been making to shore up the economy during the pandemic. The unconventional monetary policy of buying assets is commonly known as quantitative easing.15 Dec 2021

https://theconversation.com/what-is-the-fed-taper-an-economist-explains-how-the-federal-reserve-withdraws-stimulus-from-the-economy-173792

*When the Fed tapers, or slows, its bond purchases, there will be an increase in the number of bonds available on the market, resulting in lower bond prices. As a result, bonds may seem a more enticing purchase than stocks, which could lead to a dip in the stock market.16 Dec 2021

https://finance.yahoo.com/news/bond-tapering-does-affect-191200614.html

*”Historically, when the Fed tapers and hikes interest rates, you usually see bond prices go down and interest rates move up, and actually you see the stock market do well over the following 12 months because when the Fed is tightening it’s due to a strengthening economy,” says Heeten Doshi of Doshi Capital Management.27 Dec 2021

https://www.businessinsider.com/personal-finance/fed-tapering

*When the Fed tapers, or slows, its bond purchases, there will be an increase in the number of bonds available on the market, resulting in lower bond prices. As a result, bonds may seem a more enticing purchase than stocks, which could lead to a dip in the stock market.16 Dec 2021

https://finance.yahoo.com/news/bond-tapering-does-affect-191200614.html

..

..

By Matthew Boesler & Steve Matthews|May 04, 2022 at 06:07 PM

The Federal Reserve delivered the biggest interest-rate increase since 2000 and signaled it will keep hiking at that pace over the next couple of meetings, unleashing the most aggressive policy action in decades to combat soaring inflation.

The U.S. central bank’s policy-setting Federal Open Market Committee (FOMC) on Wednesday voted unanimously to increase the benchmark rate by a half percentage point. It will also begin allowing its holdings of Treasuries and mortgage-backed securities to decline in June at an initial combined monthly pace of $47.5 billion, stepping up over three months to $95 billion.

“Inflation is much too high, and we understand the hardship it is causing, and we are moving expeditiously to bring it back down,” Chair Jerome Powell said in his first in-person press conference since the pandemic began. He added that there was “a broad sense on the committee that additional 50 basis point [bps] increases should be on the table for the next couple of meetings.”

..

https://www.marketwatch.com/amp/story/fed-says-it-will-begin-multi-trillion-balance-sheet-wind-down-in-june-11651687593

..

..

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s