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FOMC Meeting Minutes is the High Impact Event of the Day

Federal Reserve Governor Lael Brainard called the task of reducing inflation pressures “paramount” and said the central bank will raise interest rates steadily while starting balance sheet reduction as soon as next month.

The Federal Open Market Committee “will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting,” Brainard said on Tuesday in remarks prepared for a speech to the Minneapolis Fed.

Investors bet that the Fed will raise rates by a half point at its May meeting. Brainard did not make it clear where she stood on that point and was not asked directly about it during the moderated question-and-answer session that followed her prepared remarks.

By law, the Federal Reserve is assigned the responsibility to pursue price stability and maximum employment. The Federal Open Market Committee (the Committee) has long recognized the connection between stable, low inflation and maximum employment.

The Fed is committed to fighting inflation which it is inevitable that interest rates will go up; the question is when and by how much.

The Fed will release on Wednesday minutes of its March meeting at 21.00 GMT+3 (server time) that we expect to provide details on its plans to reduce its bond holdings.

U.S. Treasury yields hit multi-year highs, with longer-term yields moving more quickly and partly reversing some of the recent inversions in the U.S. curve.

Gold is highly sensitive to rising U.S. interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Meanwhile, the United States and its allies were set on Wednesday to impose new sanctions on Moscow over civilian killings in northern Ukraine.

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