The Federal Reserve's policy statement from last week plus Jerome Powell's post-meeting press conference made it abundantly clear it is ready to start raising short-term interest rates in March.
As of early this morning, the futures market for federal funds was pricing in five rate hikes (of 25 basis points each) in 2022. We think that many rate hikes are warranted; we'd even support more. The Fed is badly behind the inflation-fighting curve. The Consumer Prices Index rose 7.0% in 2021, the largest increase for any calendar year since 1981. Meanwhile, commodity prices continue to rise.
