FT News Briefing The Fed’s Big Shrink
Jan 12, 2022
A US judge greenlights the FTC's case against Facebook, igniting discussions about monopoly power. Expectations rise as the latest inflation report hints at the fastest price increases in nearly 40 years. Delve into the Federal Reserve's strategy to shrink its $9 trillion balance sheet and the potential challenges of unwinding pandemic stimulus. Explore how central bank policies have distorted financial markets and consumer behavior, alongside emerging trends in upscale products and tech solutions.
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Tech Stock Rebound
- Tech stocks rebounded after Fed Chair Jay Powell vowed to control inflation during his renomination hearing.
- Investors were seemingly reassured by Powell's commitment to addressing rising prices.
Inflation Report Expectations
- While December's consumer prices are expected to show a 7% year-on-year rise, month-to-month gains might level out.
- Analysts will focus on whether inflation is broadening across the economy, particularly in service sectors.
Fed's Impact and Stimulus Removal
- The Fed's massive bond-buying has distorted global markets, impacting asset prices and investor signals.
- Removing this stimulus requires careful consideration to avoid market volatility and economic disruption.