Fed Signals Interest Rate Hike Coming In March To Help Slow Inflation

The Federal Reserve signaled that it is planning to hike interest rates for the first time since 2018 but decided to keep its key interest rate near zero for the time being.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent. With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the Fed said in a statement.

Fed Chairman Jerome Powell told reporters that he expects a quarter percent rise to be announced in March.

“I would say the committee is of a mind to raise the federal funds rate at the March meeting, assuming that conditions are appropriate for doing so,” he told reporters.

Powell said that he doesn’t think raising the interest rate will curtail job growth.

“I think there’s quite a bit of room to raise interest rates without threatening the labor market,” he explained added.

While inflation rose to a nearly 40-year high of 5.7% during the 12-month period ending in November, Powell said he expects inflation to drop during 2022.

“Like most forecasters, we continue to expect inflation to decline over the course of the year,” Powell said.

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