Fed sees long tightening cycle

It’s not only doubling the taper – one of the messages from the materials is much steeper before curve of future expected rate increases. The median sees 3 hikes in 2022 and another 3 in 2023. This is more than markets expect but bear in mind that Powell’s dot is probably lower than the median (our guess in yellow).

Source: federalreserve, XTB Research

That’s still a significant hawkish turn but this is also more or less what markets have been expecting so the first reaction is actually a big unwind – US100 surges and precious metals recover. Watch out this Silver chart as here we can either have a huge breakout or a massive turnaround.

Source: xStation5