This week, the Federal Reserve is widely expected to announce the unwinding of its monthly bond-buying program – a measure it started to support the economy during the pandemic. However, the bigger story for markets is how the central bank will discuss inflation. That’s because report after report of hotter-than-anticipated inflation has ramped up expectations that the Fed will fight the trend of higher prices by beginning to raise interest rates next year, about six months sooner than the last Federal Reserve forecast. … Fed Chairman Jerome Powell has made an effort to emphasize that the end of the program does not signal the start of a new rate hike cycle, and he is expected to repeat that message at his post-meeting briefing Wednesday. But already traders are pricing in more than two interest rate hikes for next year, while the majority of Fed officials do not even see one in 2022 in their most recent forecast.
Source: CNBC – Bonds
