T Fed meeting revealed the acceleration on debt reduction and interest rate hikes!

On Nov. 25, the Fed's rate-setting committee released the minutes of its November meeting, signaling for the first time that it may withdraw all economic relief provided during the pandemic. The minutes showed that if inflation continues to run above the committee's target, the committee should be prepared to adjust the pace of asset purchases and taper bond purchases at a faster pace to give the Fed room to raise interest rates earlier.

In a post-meeting statement, the FOMC said it would allow a monthly reduction of $15 billion in Treasuries and $5 billion in mortgage-backed securities. The program will remain in place until at least December and may continue until the end of the project.

This is important because inflation has gotten worse since the November meeting. In previous economic cycles, the Fed raised interest rates to cool the economy, but officials said they were willing to let inflation run above normal to improve employment.

However, the market expects the Fed to take more aggressive action. Traders betting on the outlook for short-term rates said although officials currently forecast no more than one hike next year the Fed will raise its benchmark rate three times in 2022 in 25 basis points each time. However, these markets are volatile and can change rapidly based on signals from the Fed.