Fed to point to rate hike in March amid fight against inflation

WASHINGTON (Reuters) – The Federal Reserve is expected on Wednesday to signal plans to raise interest rates in March as it focuses on fighting inflation and putting aside, at least for now, economic risks posed by the coronavirus pandemic. , by market volatility and by fears in the West about an invasion of Ukraine by Russia.

The monetary policy decision, to be released at 4 pm ET, will not commit the US central bank to a particular course of action for when its interest rate decision committee meets again in seven weeks.

But unless there is a major shift in the economy’s trajectory, the Fed is likely to start withdrawing pandemic-era support at its March meeting, betting that a combination of higher rates and a reduced central bank presence in financial markets will help slow the pace. the pace of rising prices.

Meetings prior to such monetary measures are typically used to telegraph what is to come.

With U.S. inflation “very high” and the unemployment rate at just 3.9%, Fed Chair Jerome Powell and his colleagues “will praise the economy without sounding apocalyptic about inflation, setting the stage for a interest rate hike in March, Cornerstone Macro economist Roberto Perli said in a note.

They are also expected to continue debating how and when to reduce the central bank’s portfolio of Treasuries and mortgage-backed securities.

Powell will give a press conference half an hour after the release of the statement. Fed officials will not provide updated economic and interest rate forecasts on Wednesday.

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