Why New Year’s chaos may signal a more balanced - but volatile - stock market in 2022 as investors grapple with a hawkish Fed
The past week saw big market swings as investors rung in the first week of trading in 2022, and market watchers pointed to the prospect of more volatility as they grapple with the Federal Reserve’s ability to fight inflation without tipping the economy into recession.
“We think markets are trying to figure out how aggressive the Fed will be in removing accommodation and tightening and if it possibly will make a policy mistake.”
The release of the minutes of the Fed’s Dec. 14-15 policy meeting stoked the uncertainty. They revealed that policy makers had discussed being more aggressive in raising rates than previously anticipated and had talked about the possibility of beginning to shrink the size of the Fed’s balance sheet more quickly than they had done when they ended an earlier round of quantitative easing spurred by the financial crisis.
Follow @TransAmericanFriendship
