Ever since the US central bank stepped in to support the economy and markets in the wake of the financial crisis, it has consistently stepped back from the brink when push came to shove.
The last time it tried to get policy back to normal between 2017 and 2019, it waited two years from its first interest rate hike before trying to reduce the size of its then $4.5 trillion balance sheet. Even so, it was forced to abandon the attempt after getting rid of just $600m worth of bonds.
Investors are betting that it will lose its nerve again this time, but they may be wrong to do so.
Tom Stevenson Telegraph 12 January 2022