Fed rate hike likely in 2022; Taper to take-off but timeline remains vague

The US Federal Reserve held rates near zero but made significant changes to growth outlook even as it indicated it is gearing to hike rates as early as next year.

Fed's taper talk

Though the FOMC gave no timeline it braced the market that the taper talk will soon be a reality. “If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the FOMC’s post-meeting statement said

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The rate lift-off
Half of the Federal Reserve members now see the first interest rate hike in 2022. Fed’s forecast showed nine of the 18 FOMC members expect a rate hike in 2022. That’s up from seven in June’s Fed projections.

Fed cuts growth forecast
The Fed however moderated their growth forecast for US, the committee now sees GDP rising just 5.9% this year, compared with a 7% forecast in June.