![quicken com quicken com](https://www.quicken.com/sites/all/themes/custom/quicken_2014/images/screenshot.png)
The S&P 500 index lifted by 1.6 per cent, closing near it’s all-time high, with the Nasdaq index higher by 328 points or 2.2 per cent. At the close of US trade, the Dow Jones index rose by 383 points or 1.1 per cent. The policy moves were already largely priced into sharemarkets. Chair Powell was keen to emphasise that “ economic activity is on track to expand at a robust pace this year,” adding, “the economy has been making rapid progress toward maximum employment.” Investors reacted positively to the Fed’s announcement on speculation that policy tightening will help combat surging prices without derailing economic growth.Commonwealth Bank (CBA) group economists expect the Fed to increase the federal funds rate four times in 2022, starting in May 2022, to an eventual target range of 1.00 per cent to 1.25 per cent. So with ‘lift off’ likely occurring after March, investors quickly turned their attention to the Fed’s accompanying projections, which showed that officials expect three quarter-point increases in interest rates next year, after holding borrowing costs near zero since March 2020. In his press conference, Chair Powell reiterated hikes in the federal funds rate would occur after tapering ends in March 2022, but cautioned that policymaker’s are not thinking about hikes right now.That said, policymaker’s have kept their options open, saying they could further adjust the pace of asset purchases, “if warranted”. The more aggressive unwinding of its monthly asset purchases has put the Fed on track to conclude its Quantitative Easing (‘QE’) program in March 2022.In his press conference, Fed Chair Jerome Powell said there is a “real risk high inflation becomes entrenched” after previous references to “transitory” inflation were dropped from his commentary. In fact, core consumer prices (excluding food and energy prices) lifted by 4.9 per cent over the year to November, the strongest annual pace since 1991, well above the Fed’s 2 per cent inflation target. But the central bank announced it will scale-back or taper its asset purchases, buying US$60 billion per month of bonds in January 2022, down from December’s rate of US$90 billion, amid a continued rise in inflation and an improving labour market. The US Federal Reserve (‘the Fed’) this morning left its target range for the federal funds rate unchanged at 0-0.25 per cent.The Reserve Bank (RBA) Governor Philip Lowe delivered a speech to CPA Australia Riverina Business Conference – Wagga Wagga – entitled “The RBA and the Australian Economy” – with a focus on its bond-buying program. A reading above 50 indicates an expansion in activity.
![quicken com quicken com](https://slideplayer.com/14179706/76/images/slide_1.jpg)
The preliminary IHS Markit Australia Composite Purchasing Managers’ index (PMI) eased from 55.7 in November to 54.9 in December. The Fed said it will reduce or ‘taper’ its asset purchases, buying US$60 billion per month of bonds in January, down from December’s rate of US$90 billion.
![quicken com quicken com](https://www.quicken.com/sites/default/files/screen-deluxe-combined.png)
The US Federal Reserve (‘the Fed’) left its target range for the federal funds rate unchanged at 0-0.25 per cent, but Fed officials see as many as three interest rate hikes in 2022. US Federal Reserve Purchasing managers’ indexes RBA Governor speech US and Aussie central banks to quicken bond taper
![quicken com quicken com](https://www.quicken.com/sites/default/files/quicken-features/image-2019-10-18-18-35-55-743.png)
US and Aussie central banks to quicken bond taper.