Powell puts a faster taper squarely on the table

Chair of the Federal Reserve System Powell is speaking again today.

Powell's earlier comment about 'transitory' being retired started the turnaround and this latest comment confirmed it. He said it's appropriate at the December meeting to discuss whether to wrap up bond purchases a few months earlier.

Powell isn't shying away on omicron fears and is instead signaling that the taper could be spend up at the Dec 15 meeting. At the same time, he said we will know more about omicron in the next week or 10 days.

Of course, the Fed blackout starts on Saturday so the market will be in suspense.

For now though, the US dollar is ripping higher and equities are falling as Powell catches the market off guard with hawkish rhetoric.

The pound is getting the worst of this as it craters to a fresh low for the year.

GBPUSD chart

More comments:

  • Markets are baking in a return to lower inflation in the longer term
  • For now, omicron is a risk, not baked into forecasts
  • We'll know more in 5-10 days and much more in a month
  • Not thinking the effects of omicron will be remotely comparable to March 2020
  • We will see covid-19 effects over time diminished
  • Bond purchases have served their purchase. Repeats that Fed will discuss the possibility of a faster conclusion of the taper