Rising Rates

Earlier today the Fed reduced the rate of its purchases of Treasuries and MBS by $20 billion/month and $10 billion/month respectively. Thus, in 3/22 tapering will conclude, paving the way for as many as three quarter-point rate hikes in CY2022, the first coming as early as 22Q2. The rationale; while supply-chain inflation will probably dissipate, the Fed does not want demand-based inflation or a wage-price spiral to get a beachhead.