Opening Statement from the December 2021 CCPM Forecaster

Opening Statement from the December 2021 CCPM Forecaster

Originally published on December 5, 2021 (pre-market release)

The Fed and Interest Rates

Over the past several weeks we have been talking about the need for the Fed to accelerate its taper in order to create the flexibility needed to deal with what is beginning to look like a more prolonged inflation problem (Securities Analysis & Trading Webinars).

On November 28, Fed chairman Powell stated that inflation appears to be less transitory. Thus, he stated he would consider accelerating the taper schedule first announced in November when the Fed meets on Dec 14-15.

We are concerned that the Fed might scratch plans to accelerate the taper if the omicron variant gets out of hand. We believe the taper should be accelerated regardless how the omicron variant plays out because inflation is becoming a significant risk.

The tight labor market remains a significant problem that is not likely to go away anytime soon. Furthermore, we believe that the omicron variant is likely to worsen supply chain problems, which will add to inflation...