Fed Sets Expectations - January 2022

During the Federal Reserve (Fed) meeting on Wednesday, January 26, the Fed set expectations for a March 2022 interest rate increase.  The Fed highlighted the strong labor market and inflation levels that are well above targets as reasons to begin tightening monetary policy.  The Fed did not go as far as to pull forward expectations of balance sheet runoff, another highly monitored part of monetary policy.  Shortly after the Fed’s announcement, equity markets rallied only to sell off into the market close.  The bond market also saw movement with 2-year yields rising 13 basis points.  If you would like to read more on the inflation dynamic we see occurring, please read our most recent quarterly essay, “Inflation – The Dog Caught the Car,” which can be found under the Newsletter tab.