Fed members sound hawkish, 3 FOMC members express worries about inflation

The US 10-year has touched a high of 2.63 percent last seen in March 2019 and dollar index too has touched a 2 year high of 99.63. This, after 3 Fed governors - worried about inflation - spoke of 50 bps rate hike in one go in May and of reducing the Fed’s balancesheet at a rapid clip.

Federal Reserve Vice Chairman Lael Brainard said that the Federal Open Market Committee (FOMC) will continue to tighten monetary policy through a series of interest rate increases and by starting to reduce the balancesheet at a rapid pace from May meeting. She added that she expects the balancesheet to shrink considerably more rapidly than it did during last rundown in 2017-2019.

Again just yesterday, the San Francisco Fed President, Mary Daly spoke at a public meeting and said that inflation is at 40-year high, it is harmful and the Fed is on its case. She also supported the idea of balancesheet run off and said that it should start in May.