Fed officials said that a strong economy and rising inflation may cause interest rates to rise earlier and faster than previously expected. Some policymakers tend to start shrinking their balance sheets shortly after raising interest rates. In the minutes of the Fed’s December 14-15 meeting released on Wednesday, “participants generally pointed out that given their personal views on the economy, labor market and inflation, it may be necessary to raise interest rates earlier and faster than previously expected”. The minutes of the meeting stated that “some participants stated that it may be appropriate to start reducing the size of the balance sheet relatively quickly after the interest rate hike”.

The number of jobs added by American companies in December 2021 is the largest in seven months, indicating that more and more Americans are returning to the labor market, filling a nearly unprecedented number of vacancies. According to data released by the ADP Research Institute on Wednesday, corporate employment increased by 807,000 in December, and was revised down to an increase of 505,000 in November. The expected median value from Bloomberg's survey is an increase of 410,000. This better-than-expected employment report may show that rising wages and optimizing working conditions have helped companies recruit. Even so, if the recent aggravation of the new crown epidemic causes more people to abandon activities such as traveling and dining out, it will be difficult for companies to maintain operations, which may affect recruitment. The US Department of Labor released its monthly employment report on Friday, and it currently expects non-agricultural employment to increase by 384,000 in December.

Martins Kazaks, a member of the European Central Bank Management Committee, said there is no doubt that the European Central Bank will take action if the inflation outlook heats up. Kazaks, who is also the governor of the Central Bank of Latvia, said that although the European Central Bank expects that the inflation rate will fall below 2% as the supply chain and energy cost issues are alleviated, the threat of the new crown epidemic is lingering and economic uncertainty is high. Under the circumstances, the European Central Bank must remain vigilant. "Don't be fooled into thinking that we will not raise interest rates or cut support when necessary," Kazaks said in an interview on Tuesday. "Of course we will perform our duties." When talking about the need to adapt to the situation, he said that "flexibility is the key."

According to people familiar with the matter, some officials from the Bank of Japan said that the central bank may discuss abandoning the long-held view at this month's policy meeting that price risks are mainly downside. People familiar with the matter said that officials may also consider adjusting the central bank's economic outlook.

Bitcoin fell to its lowest level since the flash crash in December last year, as expectations of rising interest rates put pressure on some of the best performing assets in the past few years. Bitcoin, the largest cryptocurrency by market capitalization, once fell 3.6% to $44,567, the lowest level since Bitcoin fell sharply over a weekend in early December, and its decline has narrowed since. Following a series of economic stimulus measures launched by various countries during the Covid-19 pandemic, Bitcoin has soared by more than 500% since the end of 2019.

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