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Politics : A Real American President: Donald Trump

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From: Sr K1/26/2022 2:11:54 PM
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Fed Tees Up March Interest-Rate Increase

Officials have accelerated plans to unwind support for the economy amid rising inflation


Federal Reserve Chairman Jerome PowellPHOTO: GRAEME JENNINGS/POOL/ZUMA PRESS

By
Nick Timiraos

Updated Jan. 26, 2022 2:06 pm ET

The Federal Reserve held short-term interest rates steady on Wednesday and signaled intentions to raise them in mid-March, the latest turn toward removing stimulus to temper elevated inflation.

FED WEIGHS FUTURE INTEREST-RATE INCREASES

Fed Steps Up Deliberations on Shrinking Its $9 Trillion Asset Portfolio (Jan. 24) Fed’s Powell Says Economy No Longer Needs Aggressive Stimulus(Jan. 11) Fed Minutes Point to Possible Rate Increase in March (Jan. 5) Why Do Prices Keep Going Up and What’s the Cause of Inflation? (Dec. 10, 2021)

“It will soon be appropriate to raise the target range for the federal-funds rate,” the Fed said in its postmeeting statement.

The central bank approved one final round of asset purchases, which will bring that stimulus program to a conclusion by March. Officials continued deliberations at their two-day meeting over how and when to shrink the Fed’s $9 trillion securities portfolio, which has more than doubled since March 2020. The Fed released a separate one-page statement that spelled out high-level principles to guide that process.

The Fed cut short-term interest rates to near zero and started buying bonds to lower long-term rates in 2020 as the coronavirus pandemic hit the U.S. economy, triggering financial-market volatility and a deep, short recession.

Officials pledged to hold interest rates near zero until inflation was forecast to moderately exceed 2% and until the labor market returned to levels consistent with maximum employment.

The Fed indicated in its statement that these goals were effectively met. The central bank also removed a key opening sentence from its statement that it had used since March 2020 to signal it would aggressively support growth amid an unprecedented global pandemic.

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