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When Talking About Raising Rates Makes Rates Go Down

Fed Chair Jerome Powell speaks during a news conference on Wednesday, Dec. 15, 2021. 

Fed Chair Jerome Powell speaks during a news conference on Wednesday, Dec. 15, 2021. 

Photographer: Michael Nagle/Bloomberg

This was the week when the Federal Reserve completed its so-called “hawkish pivot.” The whole process has been going on for a while. It started in early November, with the plan to taper asset purchases. And in late November, Powell indicated that the word “transitory” was no longer useful when describing inflation pressure. And this week, the Fed announced plans to accelerate tapering of its bond purchases, while penciling in three rate hikes for 2020.

What’s interesting is that, in the process of all of this, market rates actually fell.