The Federal Reserve mentioned from the minutes of its November meeting that it considers raising interest rates if inflation continues to run high.
Accordingly, the central bank had a lively discussion about the surging prices.
Its members emphasized their willingness to move if inflation pressures posed risks to its economic stability and employment objectives.
Following this two-day session, the Federal Open Market Committee (FOMC) noted that it would begin paring back on its monthly bond-buying program.
Correspondingly, the previous initiative purchased at least $120.00 billion in Treasuries and mortgage-backed securities (MBS).
Moreover, this aimed to retain money flowing in markets as it maintained broader interest rates at low levels to uplift economic activity.
In their post-meeting, the FOMC mentioned that a more extensive progress in the economy. This would permit a $15.00 billion a month purchases reduction.
This would cut back $10.00 billion in Treasurys and $5.00 billion in MBS.
In addition, the released statement explained that the schedule would stay until December.
Eventually, it could continue until the program unwinds, probably by late spring or early summer of 2022.
In previous cycles, the Federal Reserve edged up interest rates to cool the economy.
However, officials explained that they would allow inflation to run hotter than usual to progress the employment picture.
Markets Expect Faster Federal Reserve Taper Plan
On the other hand, markets expected a more aggressive move from the Federal Reserve.
On Thursday, strategists projected that the Fed would likely double the tapering of its monthly bond purchases from January to $30.00 billion.
At the same time, they anticipated the central bank to wind down its pandemic-era bond-buying scheme by mid-March.
Subsequently, Goldman Sachs predicted that the Federal Reserve would boost its benchmark rate three times in 2022 with 25 basis point intervals.
This is despite the current official forecast of no more than one hike next year.
Nevertheless, volatility in the market could adjust quickly depending on the signals given by the central bank.