"Flashback: In recent years, the Fed has pivoted toward a dovish direction in the face of market turmoil. One instance was in early 2016, when it flagged risks from an economic slowdown in China and the strengthening U.S. dollar. The other came in late 2018, when stocks sold due to four rate hikes that year and a policy tightening cycle.
However, this time around, the Fed may be less inclined to halt its plans. Inflation has taken over the conversation - and what may come as a surprise to some investors - price stability (not markets) is actually part of the central bank's dual mandate. Investors are even pricing in at least four rate hikes in 2022, with the 10-year Treasury yield soaring as much as 40 basis points to 1.9% in the first three weeks of the year.
What they're saying: "We doubt that Chair Powell will feel much need to make soothing noises in Wednesday's press conference," wrote Lou Crandall, chief economist at Wrightson ICAP. "I don't think anything the Fed is going to do is going to make the markets happy," added Louis Gargour, chief investment officer at LNG Capital."
