If we look at the current statements from Fed Chairmen;
"I think the committee should go in a more hawkish direction in the next few meetings, so we're managing inflation risk appropriately," said Bullard, Chairman of the St. Louis Fed.
· “I think we have overcome the taper tantrum problem, because we continued with tapering. We could move faster -- we've kept it optional on this one, we can accelerate contraction if appropriate.”
· “Another point I will put on the table is that instead of waiting for a while for this decision, we can let the balance sheet flow at the end of the contraction. I think that would be a way to have a slightly more hawkish policy than others.”
At the point of the decline in asset purchases, the pressure on inflation, which is the main phenomenon that will push the Fed's threshold, is increasing. Naturally, the latest CPI data also affect the rate hike expectations. Pricing increased for early scheduling based on market scale established as 2023 or 4Q22. Interest rates are on the radar in June and July 2022. These prices will be shaped according to inflation concerns. The revisions to be made at the December FOMC meeting will be important in confirming the peak movement in the 5-year and 10-year inflation rates. Depending on the situation, it can be expected that the Fed will increase the cuts of $ 15 billion to $ 20 billion.
Biden is expected to decide between Powell or Brainard over the next four days on the next term Fed chair. Presumably both will get approval from Congress. A decision is also likely to be made on filling other vacancies at the Fed. One seat was vacant under Trump, and Quarles, the then-appointed vice president, leaves at the end of the year, while Clarida's term expires at the end of January.
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