Connect with us

Hi, what are you looking for?


Federal Reserve likely to signal March interest rate hike this week

The Federal Reserve is expected to confirm plans this week for an interest rate hike for March as officials look to address the decades-high inflation hammering American consumers. Fed officials will begin their two-day meeting on Tuesday, with an announcement on policy scheduled for Wednesday afternoon. Fed Chair Jerome Powell will hold a press conference following the meeting. The central bank has indicated it will begin tightening monetary policy and withdrawing measures meant to support the US economy during the COVID-19 pandemic. Aside from the rate hikes, the Fed is also expected to provide an update on its plans to trim its $9 trillion balance sheet, which doubled during the pandemic as the bank stepped up bond purchases. With inflation hitting 7% in December, well above the Fed’s target of 2%, analysts are expecting US policymakers to adopt a more hawkish approach in the coming months. The unemployment rate currently stands at 3.9%, near what the Fed considers to be maximum employment, which officials tabbed as a prerequisite for rate hikes. “The consensus is that the time has come to move,” Roberto Perli, chief economist at Cornerstone Macro told the Associated Press ahead of the meeting. “The debate is over how fast.” The Fed hasn’t raised interest rates since December 2019, shortly before the pandemic began. Concerns about the Fed’s plans have roiled US stocks and contributed to volatility in recent weeks. Ahead of the Fed’s meeting, the Dow Jones industrial Average fell by as much as 1,000 points in trading Monday before turning positive with a furious rally just before market close. The S&P 500 Index entered correction territory, defined as a 10% decline from its most recent high, during the wild day of trading before posting a modest gain. The tech-heavy Nasdaq index experienced a similar swing. Investors have looked to reduce their holdings of risky assets, including leading cryptocurrencies such as bitcoin, ahead of the Fed’s expected hawkish turn. Higher interest rates make borrowing more expensive for consumers and businesses, likely slowing economic growth. Most analysts expect the Fed to raise interest rates three or four times in 2022. Goldman Sachs predicts hikes in March, June, September and December, though its economists warned this week that the Fed could enact even more increases this year if inflation continues running hot. A sharper increase in rates than the quarter-percentage-point hikes that most expect could add to trading volatility, according to Bankrate chief financial analyst Greg McBride. “Could it be a larger, half-point hike?” McBride said. “If there is any likelihood of that happening, this is the meeting where the Fed needs to begin prepping markets for that possibility.” The Biden administration has faced mounting pressure to address surging inflation. Americans are paying steep prices for necessities such as groceries and gas. While President Biden and top administration officials have argued supply chain disruptions and corporate greed are to blame, GOP lawmakers say the Democrat-backed policies are responsible for the inflation spike.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like


Activist investor Starboard Value has purchased a 6.5% stake in web services firm GoDaddy worth about $800 million, according to a regulatory filing with...


Contact The Author Female employees at CNN are furious that chief spokesperson Allison Gollust is keeping her job after lying about her affair with...


North Korean hackers managed to steal a fortune in cryptocurrency in 2021, according to the results of a recent study. Cybercriminals based in North...


Katie Couric dished on Jeff Zucker and Allison Gollust’s relationship in her tell-all memoir last fall, saying it struck staffers as “super strange” when...

Business Tribune