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For the past few months, the federal reserve is scaring the ‘Markets with The triple threat of policy tightening

Investors have been preparing for the Federal Reserve to Start hiking Intrest rates. They also know the central bank is going to cut the number of bonds it buys each month. On top of that, They figured, eventually the tapering would lead to a reduction in the nearly $9 trillion in the assets the fed is holding.What they didn’t expect were all three things happening at the same time. But minutes from the fed’s December meeting which was released on Wednesday, Indicated that may well be the case

the meeting summary showed members ready to not only start raising their interest rates and tapering bond-buying but also being prepared to engage to reduce inflation, Recovery from the pandemic.

Federal Reserve Chairman Jerome Powell is telling U.S. lawmakers Wednesday that the U.S. central bank is on track to raise interest rates this month for the first time in three years, because of high inflation, a tight labor market and strong economic demand

“With inflation well above 2% and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month,” Powell wrote in his prepared remarks that he was scheduled to deliver to the House Financial Services Committee.

Although many traders have already priced in a possible rate hike in March after the central bank hinted at such an outcome after the most recent Federal Open Market Committee (FOMC) in February, questions remain as to the magnitude of any rate hike.

Powell didn’t specify the size of the rate hike he felt would be appropriate..

The Chicago-based CME Group’s FedWatch tool shows that futures traders see a 90% chance of a quarter-percentage point hike, as opposed to a half-percentage point, which many thought was very likely just a week ago.

The central bank is concerned about inflation, now at its highest in four decades Powell, however, expects inflation will diminish this year as supply constraints ease and demand moderates because of the shrinking effects of fiscal stimulus and tighter monetary policy

“We are attentive to the risks of potential further upward pressure on inflation expectations and inflation itself from a number of factors,” he said. “We will use our policy tools as appropriate to prevent higher inflation from becoming entrenched.”

Powell also mentioned Ukraine, saying that the implications of the war for the U.S. economy are “highly uncertain.”

While the Fed has indeed confirmed a rate rise in March, and has also suggested additional rises, itwould be helpful to see the 2022 meeting schedule for the Federal Open Market Committee (whichoversees rates). That way, traders and investors can prepare themselves for when hikes are likelyto be confirmed.

• January 25–26 • March 15–16 • May 3–4 • June 14–15 • July 26–27 • September 20–21 • November 1–2 • December 13–14

There are seven more FOMC meetings penciled in for this year, so in theory we could have amaximum of seven rate increases. However, this is unlikely, while it’s also likely that the threerises that have been indicated by the Fed will come sooner rather than later, in order to counteractrising inflation.Indeed, as of writing, inflation in the United States is at a 39-year high of 7%, meaning we basicallyhave to go back to the era of stagflation to find a similar rate. Given that this figure has risen from1.4% at the start of 2021, it seems a safe bet to say that the Fed will want to impose its three raterises in each of its next three meetings.This means that March 15–16, May 3–4 and June 14–15 will likely bring rate hikes, which in turn willhave at least a short-term impact on the stock and cryptocurrency markets.

The question is: how much of an impact will hikes have? Well, looking at the recent marketdownturn, the rise in March (and subsequent hikes) could have a significant impact on bitcoinand the wider cryptocurrency market.

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