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Fed and China stress-test world as rarely before

TOKYO – It turns out, a rate hike by the mighty US Federal Reserve is no match for a bit of Covid-19 news in China.

In 2013, global markets had the financial equivalent of a heart attack over hints the most powerful central bank might, perhaps, someday, throttle back on bond purchases. It was dubbed the “taper tantrum.”

On Wednesday, though, Fed Chairman Jerome Powell’s team tightened for the first time in more than three years. Based on the Fed’s language after the 25-basis-point increase, strategists like Jason Bloom at Invesco agree the US is now at the beginning of a seven-rate-hike cycle because it’s “way behind the curve” on fighting inflation.

The reaction from global markets, including the price of oil? Shrugs all around.