https://sputnikglobe.com/20220105/fed-mulls-faster-us-rate-hikes-as-inflation-soars-december-meeting-minutes-show-1092049572.html
Fed Mulls Faster US Rate Hikes as Inflation Soars, December Meeting Minutes Show
Fed Mulls Faster US Rate Hikes as Inflation Soars, December Meeting Minutes Show
Sputnik International
Fed Mulls Faster US Rate Hikes as Inflation Soars, December Meeting Minutes Show
2022-01-05T22:34+0000
2022-01-05T22:34+0000
2022-08-06T13:36+0000
us
us economy
rate hikes
federal reserve
inflation
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Separately, a reading of bond market traders’ expectations showed a more than 70% chance of the Fed imposing by March its first rate hike since the coronavirus outbreak two years ago. Earlier readings had predicted a rate hike at between April and June.The Fed has kept interest rates at virtually zero since the COVID-19 outbreak, which sparked record unemployment in 2020 and the first recession since the 2008/09 financial crisis.In order for the central bank to raise rates, it needs steady economic growth, employment at near maximum and inflation at 2% at least for a year.The economy shrank by 3.5% in 2020 due to shutdowns and other disruptions caused by the pandemic. The Fed has projected a 5.5% growth for 2021 and 4% for 2022.While unemployment hit a record high of nearly 15% in April 2020, it was at just 4.2% in November — almost at the 4% mark that the Fed defines as "maximum employment."The Fed’s problem though is inflation, which is running at 40-year highs as prices of almost everything have soared from the lows of the pandemic due to higher wage demands and supply chain disruptions. Instead of moderate rate hikes, the central bank may have to resort to more frequent and larger increases to tamp down such price pressures.The Fed acknowledged in its December minutes the extraordinary challenge to the US economy laid down by inflation. “All participants noted that inflation had remained significantly over 2%, indicating supply and demand mismatches associated to the pandemic and the economy's reopening,” the central bank said.In preparation for the rate hike, the Fed has also been tapering since November its monthly bond- and asset-buying of $120 billion that it launched two years ago to support an economy collapsing from the weight of the COVID crisis. Since December, the central bank has committed to shave $30 billion each month from those purchases and could wrap them by March — putting a rate hike on track immediately after that.
https://sputnikglobe.com/20211225/us-fed-cannot-fix-runaway-inflation-by-itself-amid-global-supply-chain-failure-investor-says-1091792089.html
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federal reserve, federal open market committee, faster rate hikes for 2022, inflation
federal reserve, federal open market committee, faster rate hikes for 2022, inflation
Fed Mulls Faster US Rate Hikes as Inflation Soars, December Meeting Minutes Show
22:34 GMT 05.01.2022 (Updated: 13:36 GMT 06.08.2022) WASHINGTON (Sputnik) - Policymakers at the Federal Reserve considered faster rate hikes for this year than previously intended when they met in December amid soaring inflation, minutes from that meeting released by the US central bank on Wednesday showed.
Separately, a reading of bond market traders’ expectations showed a more than 70% chance of the Fed imposing by March its first rate hike since the coronavirus outbreak two years ago. Earlier readings had predicted a rate hike at between April and June.
“Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated,” the Fed said in the minutes of the December 14-15 meeting held by its policy-making Federal Open Market Committee.
The Fed has kept interest rates at virtually zero since the COVID-19 outbreak, which sparked record unemployment in 2020 and the first recession since the 2008/09 financial crisis.
In order for the central bank to raise rates, it needs steady economic growth, employment at near maximum and inflation at 2% at least for a year.
The economy shrank by 3.5% in 2020 due to shutdowns and other disruptions caused by the pandemic. The Fed has projected a 5.5% growth for 2021 and 4% for 2022.
While
unemployment hit a record high of nearly 15% in April 2020, it was at just 4.2% in November — almost at the 4% mark that the Fed defines as "maximum employment."
The Fed’s problem though is inflation, which is running at 40-year highs as prices of almost everything have soared from the lows of the pandemic due to higher wage demands and supply chain disruptions. Instead of moderate rate hikes, the central bank may have to resort to more frequent and larger increases to tamp down such price pressures.
![The Federal Reserve building is pictured in Washington, D.C., U.S., August 22, 2018. The Federal Reserve building is pictured in Washington, D.C., U.S., August 22, 2018. - Sputnik International, 1920, 25.12.2021](https://cdn1.img.sputnikglobe.com/img/07e5/0b/1d/1091122895_0:35:3295:1353_1920x0_80_0_0_462016383bfc3f77c9ec4d6684b70a17.jpg)
25 December 2021, 10:39 GMT
The Fed acknowledged in its December minutes the extraordinary challenge to the US economy laid down by inflation. “All participants noted that inflation had remained significantly over 2%, indicating supply and demand mismatches associated to the pandemic and the economy's reopening,” the central bank said.
In preparation for the rate hike, the Fed has also been tapering since November its monthly bond- and asset-buying of $120 billion that it launched two years ago to support an economy collapsing from the weight of the COVID crisis. Since December, the central bank has committed to shave $30 billion each month from those purchases and could wrap them by March — putting a rate hike on track immediately after that.