US Fed brings rate hike forecast forward to 2023

As expected, US Federal Reserve voted on Wednesday the to keep interest rates near zero, but said they expect rates hikes to be needed sooner than previously thought, with two hikes seen in 2023. The Fed expects inflation to continue to run above 2% in 2021, but for the US economy to continue to strengthen towards maximum employment, one-to-two years out. Fed Chair Jerome Powell said that there is no change to the Fed's extensive asset purchase program for now, but that future meetings will focus on the ongoing need for this stimulus rather than rate hikes. With rate hikes expectations being brought forward, there is a general expectation that asset purchases would be tapered sooner than expected as well, however. Risk assets sold off on prospects that rate hikes could be brought forward, as did precious metals as the US dollar strengthened to month highs. US government debt sold off as the perceived cost of borrowing in the near-to-medium term increased.