The US officials voiced concern over the Fed. The US regulator's current monetary policy is the key focus of discussions in the currency and stock market over the past few months
Notably, most US macroeconomic indicators have shown positive dynamics in recent months. Currently, the Fed is taking into account inflation while making decisions. However, previously the labor market was of crucial significance. Despite the nonfarm payrolls being weak over the past two months, Jerome Powell and his colleagues said in January that they would focus entirely on inflation, which had risen to 40-year highs. Besides, inflation continues to rise and is at the level of 7%, while the US economy is further recovering and unemployment is declining. Therefore, it is time to support the economy. However, the possibility of monetary policy tightening is only increasing...
Late last week, Atlanta Fed Chairman Rafael Bostic, who is not a voting member of the Fed, said in an interview that a decision to raise the key rate immediately by 0.5% could be made in March. The Fed last raised the rate by 50 basis points in 2000. Bostick noted that such a decision could be made if a more aggressive method to the inflation problem would be necessary. However, inflation would have to accelerate in January and February for a 50 basis point rate hike. Only in this case the Fed officials will come to this key decision. At the same time, it is noteworthy that the FOMC members are discussing more drastic measures.
At the same time, experts at Goldman Sachs Investment Bank said they would expect 5 key rate hikes in 2022. BNP Paribas expects 6 rate hikes, while JPMorgan and Deutsche bank predict 5 rate hikes. As mentioned above, at least 5 rate hikes are planned for 2022. Moreover, these outlooks do not take into account the fact that the rate may rise not necessarily only by 0.25% at a time. Raphael Bostic stated that all possible variants were considered. Therefore, 2022 would most likely be a year of serious deterioration of conditions in the financial market. The correction of stock indices will probably continue the whole year. However, it is not clear how strong it would be.