VIEW: TD Tweak Tapering View Post-Powell, Roll Forward Rate Hike Call

TD Securities note that “the Fed chair virtually pre-announced an acceleration of tapering at this month's meeting. We expect the monthly pace to be doubled to $30bn from $15bn, consistent with QE ending in mid-March instead of mid-June.”

• “As before, the criteria for "liftoff" are much stricter than the criteria for tapering. We also continue to expect significant slowing in inflation and growth in 2022 as fiscal stimulus fades, and we believe even modest slowing will encourage officials to be patient in their quest for maximum employment. That said, stronger than expected data in Q4 are helping move the economy a bit closer to maximum employment, and Chair Powell is showing new hawkishness following his renomination. We now expect a first rate hike in March 2023, instead of December 2023. We also recognize the risk of earlier tightening if the data don't show some clear slowing by Q222.”