The Federal Reserve is feeling confident about the state of the economy. According to its own Fed Minutes, released today, America’s central bank is looking to accelerate its plans for interest rate hikes and balance sheet reduction. This is fairly unsurprising, given the rampant discourse about inflation.
With this signal, the Fed might look to start its rate-raising campaign in March. That comes even amidst a rapid rise in COVID-19 cases in the U.S., which recently cropped up more than a million new cases of the virus in a single reporting day. Meanwhile, the 7-day average is nearing half a million. That makes the first wave, and its economic shutdown, look small by comparison.
The Fed isn’t feeling sick, though. Maybe that’s because employment is strong, hospitalizations have been surprisingly low, and a growing sentiment of “who cares about COVID?” is sweeping the economy. On the other hand, the market is feeling sick to its stomach — and that’s because the words “rate hike” are very scary to investors.
Indexes were battered by the news, with the Nasdaq falling 3.34% and the Russell 2000 retreating to the tune of 3.30%. The S&P 500 didn’t fare much better, down 1.94%.