Having kicked off the unwinding of the crisis-era stimulus this month, the U.S. Federal Reserve (Fed) may accelerate the pace of the taper next year, according to a Bloomberg report citing a client note from Goldman Sachs.

  • The central bank will double the pace of scaling back its liquidity-boosting asset purchases to $30 billion per month from the current $15 billion, Goldman economists said, predicting three rate hikes in 2022 and two in 2023.

  • The new projections mean the asset purchase program would end in March.

  • The investment banking giant expects the first rate hike from near zero in June of next year.

  • “The increased openness to accelerating the taper pace likely reflects both somewhat higher-than-expected inflation over the last two months and greater comfort among Fed officials that a faster pace would not shock financial markets,” economists led by Jan Hatzius noted.

  • The Fed cut rates to near zero and began purchasing assets worth $120 billion per month following the coronavirus-induced crash of March 2020.

  • The massive liquidity injections led to unprecedented risk-taking across all corners of the financial market, including bitcoin.

  • Minutes from the Fed’s November meeting released Wednesday showed a growing number of policymakers were ready to speed up the taper and raise interest rates if inflation continues to run high.

  • Faster unwinding of stimulus, if any, may weigh over bitcoin, which remains vulnerable to fed tightening, and asset prices, in general. The cryptocurrency fell almost 7% on Friday, amid a massive pullback in the financial markets, as concerns over a new coronavirus variant dampened risk appetite.

All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.

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