Fed minutes signal that rate hike may come sooner than expected

The minutes of the last meeting of the US Federal Reserve (Fed) showed that the rate hike may be earlier than expected.

The Fed has released the minutes of the Federal Open Market Committee (FOMC) meeting, held on December 14-15, 2021.

In the minutes of the last meeting, where the policy rate was kept constant in the range of 0-0.25 percent and the pace of reducing asset purchases was increased, it was emphasized that the possibility of an increase in interest rates increased earlier than expected.

"Members generally noted that given the outlook for the economy, the labor market, and inflation, it may be necessary to raise the federal funds rate sooner or more quickly than members previously anticipated," the minutes said. statement was included.

Talks about downsizing the balance sheet began
It was noted in the minutes that the members decided that it is no longer necessary to continue the increase in the policy support provided by the current rate of asset purchases due to high inflation pressures and the strengthening employment market, and how the balance sheet policy would play a role in a plan that requires reducing the support provided to the economy started to be discussed at the December meeting.

In the minutes of the Fed, it was reported that some members stated that it would be appropriate to start reducing the size of the bank's balance sheet after the start of increasing the interest rate.

It was emphasized in the minutes that most of the members decided that the conditions required for the rate hike could be met relatively soon if the recent improvement in the labor market continues.

Most members felt that Omicron made the economic outlook more uncertain.
In the minutes, it was stated that inflation was hovering above the 2 percent target for all members, reflecting the supply and demand mismatches associated with the Kovid-19 outbreak and the normalization of the economy.

In the minutes, which pointed out that most members think the risks to inflation are on the upside, it was stated that members noted a number of signs that the labor market is very tight, including record layoffs and job vacancies, as well as a notable increase in wages.

In the minutes, it was stated that most members emphasized that the Omicron variant of Kovid-19 made the economic outlook more uncertain, while some members thought that the variant in question would not change the recovery path of the economy.