The Federal Reserve Could Start Rising The Interest Rates In March

St. Louis Federal Reserve chief James Bullard said Thursday that the Fed could start raising interest rates in March, the WSJ reported.

“The FOMC (Federal Open Market Committee) may start raising interest rates as early as March, to be in a better position to control inflation,” Bullard told a meeting of the CFA Society St. Louis.

“Subsequent interest rate increases in 2022 could be pushed forward or pushed back depending on developments in inflation,” he added.

The central banker also noted that the Fed is in a “good position” to take further steps to control inflation if necessary, such as allowing passive balance outflows, raising interest rates and adjusting the timing and pace of subsequent increases in inflation. interest rates “.

The US Federal Reserve agreed in December to end asset purchases in March and laid the groundwork for an interest rate hike that everyone sees fit in 2022.

Forecasts released in December show that the Fed expects interest rates to rise by three quarters of a percentage point this year.

Bullard said the country’s inflationary “shock” meant the central bank needed to be able to meet its inflation targeting targets for the next few years.

The change in policy in December came just as the coronavirus variant Omicron began to increase daily levels of infection. But Bullard said he did not think the current wave would throw the US or Fed economy off course.

The wave in the United States is expected to follow the model where the option was first identified, in South Africa, Bullard said, citing forecasts that the daily number of cases could peak at the end of this month.

As the U.S. labor market is “very strong” and high inflation acts as a “repressive tax” that burdens especially the poor, the Federal Reserve must raise interest rates this year, San Francisco Federal Reserve President Mary Daly said. Reuters “.

However, she added, as the US economy maintains millions of fewer jobs than before the COVID-19 pandemic, as many workers remain wary of the virus, the US Federal Reserve’s approach must be based on data and measurable.

“If we act too aggressively to compensate for the high inflation caused by the imbalance in supply and demand, we will not actually do much to solve supply chain problems, but we will absolutely bind the economy in a way that means less work.” said the Daily.

As the economy approaches full employment in the context of an ongoing pandemic, she added, “there is a difference in the short and long term … balancing these things as we move forward in 2022 will be crucial for monetary policy.”

Minutes of the December 14-15 meeting, released on Wednesday, show that some in the Fed want to move even faster to tighten policy, including by shrinking the Fed’s balance sheet by more than $ 8 trillion.

“I think it may be necessary, we will probably have to raise interest rates … to keep the economy in balance,” the Daily said.

Inflation in the United States is painfully high, but there may be some relief

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