U.S. Inflation To fire Up Again
XM Group | Dec 03, 2021 09:25AM ET
Fed hits panic button
The Fed chief dropped a bombshell on financial markets this week by signaling that his central bank will consider accelerating the pace at which it withdraws liquidity from the system. He downplayed the Omicron variant and stressed repeatedly that inflation risks have intensified.
With inflation high and rising, the jobs market healing quickly, and consumption booming, the Fed is clearly preparing to step on the brakes to prevent the economy from overheating. Powell suggested it might be appropriate to end asset purchases “a few months” earlier, essentially opening the door for raising interest rates sooner.
Monthly economic growth data for October will be released on Friday and could be crucial as traders try to decide whether the current market pricing for four rate increases next year is realistic or not.
Finally, Chinese trade numbers will hit the markets on Tuesday ahead of the inflation report on Thursday.
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