Fed Accelerates Tightening – Bitcoin and the Markets Go Green Again. Why?

The Fed blew the whistle on the party, but more importantly ended the uncertainty. The markets like it.

All investors around the world had their eyes on Jerome Powell yesterday when he took the stage to announce the latest decisions made by the Fed after its FOMC meeting. The markets had been moving sideways for several days awaiting these announcements in keeping with the adage known to all: “Don't Fight the Fed”.

What Jerome Powell announced is not surprising. The Fed is going to change its ultra-accommodating monetary policy more aggressively in the weeks and months to come.

Gone is the “soft” tapering with asset purchases to slow down by $15 billion per month until mid-2022, with a rate hike only in the second half of 2022. The Fed is accelerating tightening.

Fed ends uncertainty by announcing it will accelerate tightening

In effect, the Fed will be buying $60 billion of bonds each month starting in January, half the level before the November taper and $30 billion less than it had been buying in December. The Fed will accelerate the reduction further come 2022.