Fed Officials Eye Sooner Interest Rate Hikes in 2022

Source: Federal Reserve

Officials of the US Federal Reserve are now looking at a more immediate timetable for hike interest rate this year, as inflationary concerns increase.

• Minutes of the December meeting indicate that officials believe that the current inflation trend warrants lifting rates “sooner or at a faster pace” than anticipated.
• A number of officials also believe the $8.76-trillion bond portfolio should be cut down soon after rates are raised in a bid to cool the economy.
• The majority of the officials project at least three quarter-percentage-point increases in 2022, higher than around half that believed hikes could wait until 2023 in September.
• Nearly all officials indicated that they had revised their 2022 inflation forecasts notably, and a number also did so for the following year.
• Governor Christopher Waller remarked that accelerating the tapering would be for the March meeting to be a “live meeting” to raise rates.
• Inflation is expected to moderately exceed 2% this year, in line with the target set by officials to warrant a rate hike.