According to a Reuters report, the Federal Reserve on Wednesday said it is likely to hike interest rates and end its bond purchases in March to fight inflation. Powell said it could raise the federal funds rate at the March meeting if conditions are appropriate to do so. Subsequent interest rate increases and an eventual reduction in the Fed's asset holdings would follow as needed, Powell said, while the Fed continues to monitor the inflation rate, currently at a multi-decade high, to achieve the central bank's 2% target. The pace of subsequent rate hikes or how quickly officials will let the balance sheet decline is undecided. But Powell confirmed that with inflation high and getting worse, the Fed plans to clamp down on credit and end the support it has provided to the U.S. economy during the coronavirus pandemic. Since the Fed's last policy meeting in December, Powell said, inflation "has not gotten better,” adding that "this is going to be a year in which we move steadily away from the very highly accommodative monetary policy we put in place to deal with the economic effects of the pandemic."
Comments