The U.S. Federal Reserve’s announcement that reducing inflation is now more pressing than reducing unemployment suggests the central bank will probably accelerate its winding down of asset purchases, increasing the probability of interest rate hikes in 2022 that would slow the U.S. economy and tighten financial conditions globally. Fed Chairman Jerome Powell told the Senate Banking Committee on Nov. 30 and the House Financial Services Committee on Dec. 1 that the mandate on inflation now took precedence over the mandate on employment. The announcement came ahead of the Dec. 14-15 meeting of the Federal Open Market Committee (FOMC). Powell would probably not have indicated the shift and acceleration of a wind-down of the Fed’s asset-purchasing program (known as quantitative easing, or QE) unless he already had broad support within the FOMC....
