FED announced plans to accelerate taping

Chairman of the US Federal Reserve Jerome Powell said that at the December meeting of the Open Market Committee, the timing of the completion of the bond purchase program will be discussed. The regulator may complete the program several months ahead of schedule, given the good state of the economy, the shortage of workers in the labor market and high inflation.

Such a «hawkish» tone of Powell's comments took market participants by surprise, and also somewhat cooled the rally of US Treasury bonds. Stock indexes also rushed down: the S&P 500 index fell to 4,567.00, the Dow Jones fell to 34,483.72, and the NASDAQ – to 15,537.7.

Recall that in November, the Fed began to reduce $120 billion in monthly purchases of Treasury bonds and securities at a pace that would allow it to complete the winding down by mid-2022. Recently, an increasing number of Fed representatives have been advocating the end of asset purchases in the spring of next year. They are confident that this option will allow them to start raising key rates earlier, if the situation with rising inflation requires it. 

Powell notes that the current inflation rate is twice the Central Bank's flexible target of 2%. And if earlier it was possible to apply the term «transitory issue» to high inflation, now this is no longer the correct definition for current levels.