The Fed Has to Taper Before Raising Rates, Says Hornbach

The video discusses the Federal Reserve's tapering process, explaining that tapering asset purchases is not the same as tightening monetary policy. It highlights the market's focus on the link between tapering and rate hikes, noting that tapering is a necessary step before rate hikes. The discussion also covers the potential impact of CPI data on inflation expectations and the implications for the Fed's tapering strategy. Additionally, the video examines the effect of rising US interest rates on the US dollar and its decoupling from European rates.

What is the distinction between tapering and tightening in the context of the Fed's monetary policy?

Why is tapering considered a necessary first step towards rate hikes according to the discussion?

What challenges does the Fed face in communicating the relationship between tapering and rate hikes?

How might the current inflation data affect the Fed's tapering process?

What is the expected impact of rising US interest rates on the value of the US dollar compared to the euro?