The Fed is getting ready to raise interest rates
“With inflation well above 2% 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 statement read.
The central bank slashed rates to near zero in March 2020 when the pandemic took the US economy into a choke hold.
Last month, the Fed signaled it would hike interest rates multiple times throughout 2022. Investors expect the first rate hike to take place at the Fed’s next meeting in March: Market expectations for a rate increase in March were at nearly 90% on Wednesday afternoon, according to the CME FedWatch tool.
In November, the Fed also announced the end of its pandemic-era stimulus and accelerated the roll-back of its asset purchases the following month.
The banks will continue reducing its monthly asset buying spree and end them in early March, the Fed said Wednesday.
After the end of its stimulus program and liftoff in interest rates, reducing its massive balance sheet is next up on the Fed’s to-do list. The bank affirmed that it only expects to start focusing on the balance sheet reduction after rate hikes have begun.
This is a developing story. It will be updated
