Change Of Tone: Fed’s More Hawkish Views On Inflation, Future Rates, Bring Pressure On Stocks

Change Of Tone: Fed’s More Hawkish Views On Inflation, Future Rates, Bring Pressure On Stocks

The Fed didn't announce a stimulus tapering coming out of its meeting today, but the market sure acted like it did and even Fed Chairman Jerome Powell indicates the time for talking about it is here. Stock indices quickly fell to session lows when the Fed issued projections showing much better chances of a rate hike next year. It also raised its inflation growth estimate for this year pretty sharply. These moves led to thoughts among analysts that a taper of the Fed's $120 billion a month bond-buying program might start by late this year or early next, though the Fed is sticking by it for now. We can think of this meeting as the "talking about talking about" tapering meeting, Powell said in his press conference after the meeting, suggesting it's time to retire that term that he himself created. However, he didn't give any timing on when the Fed would give advance notice of any timing of a decision to slow down those bond purchases. Seven members of the Federal Open Market Committee (FOMC) now expect at least one rate hike next year, up from four who did at the Fed's March meeting. Also, 13 FOMC members expect