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Possible Interest Rate Hikes in 2022 – Investment Implications

December 17, 2021

Federal Open Market Committee (FOMC) Meeting Decision

The FOMC met on December 15th and announced that the current accommodative monetary policies of bond purchases and a low Federal Funds Rate (FFR) will be ending due to employment gains coupled with high levels of inflation.  The FOMC is growing concerned that inflation will be more persistent than previously thought and wants to take measures to address this.  Therefore, current bond purchases will be reduced by $30 billion per month, putting them on track to wind this program down by March 2022.  Sometime after this, it was signaled that they plan to raise the FFR in three 0.25% increments in 2022 and 2023.  The current FFR is in the 0.00-0.25% range, implying that rates would rise to 1.0% in late 2022, and 1.75% by the end of 2023.

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