It doesn’t seem that long ago that the rhetoric out of the U.S. Federal Reserve (and most central banks) was that they were going to be ‘patient’ in removing monetary stimulus, that the surge in inflation was ‘transitory’ and they were not even “thinking about thinking about” raising interest rates until 2023!  All of that chatter went out the window with the November Fed meeting, which was preceded by a 6.2% year-over-year surge in consumer prices which stunned economists, rattled investors, and likely horrified policy makers. It marked the fifth straight month that the consumer-price index exceeded 5%, and signaled the largest jump in consumer price inflation since July 1982.  Some of the pricing pressures stemmed from reopening bottlenecks, but there is more to the story as core inflation is now running well above the Federal Reserve’s longstanding 2% target.  While markets had been bracing for a ‘tapering’ of the $120 billion/month buying of bonds, many had not expected such an abrupt end.  The Fed announced that they plan to reduce these purchases by $15 billion per month, starting immediately.  That would fully remove the stimulus by July, 2022, at which point they indicated that they would most likely start increasing interest rates. (more…)