FOMC Minutes Indicating A More Aggressive Moves By The Fed, Stocks Fell.

Federal Reserve officials who seemed eager at their FOMC meeting indicated that officials are ready to aggressively move away from the current easy policy stance given that inflation was likely to be higher than they expected over the next two years.

Participants remarked that the current economic outlook was much stronger, and said the jobs market is nearing full employment.

It may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated.

At the meeting, Fed officials had a wide-ranging discussion of how to move policy away from its current easy stance by hiking rates and also shrinking its $8.67 trillion balance sheet.

The central bank has now pivoted sharply, and at its December meeting, agreed to end its asset purchases in mid-March. The central bank has penciled in three rate hikes in 2022. The market sees a strong possibility that the first hike could come at the Fed’s March meeting.

Economists note that a federal funds rate of 2.5% is generally viewed as the “neutral” Fed funds rate that neither stimulates or slows down the economy.

Markets Reaction 

The DJIA, -1.07% SPX, -1.94% moved sharply lower after the Fed minutes were released.

The S&P 500 fell 1.94% to 4,700.58.

The tech-heavy Nasdaq saw its biggest one-day loss since February, losing 3.34% to end at 15,100.17.

The yield on the 10-year Treasury note TMUBMUSD10Y, 1.693% moved above 1.7%.