WASHINGTON (Reuters) – The Federal Reserve on Wednesday will close the door on its ultra-easy pandemic-era monetary policy and step up the fight against stubbornly high inflation with the first in what is likely to be a series of interest rate hikes this year.
The shift, beginning with an expected quarter-percentage-point increase in the U.S. central bank’s benchmark overnight interest rate, has been in the works since last fall and has already driven up the cost of home mortgages and other key types of credit in anticipation of what the Fed will do to curb prices that are rising at their fastest pace in 40 years.
Fed projections and long run rate https://graphics.reuters.com/USA-FED/FOMC/xmvjoemrypr/
https://graphics.reuters.com/USA-FED/FOMC/movandglapa/chart.png
Yet the urgency surrounding the Fed’s policy meeting this week has intensified because inflation has shown no signs of easing and may even rise further on the back of Russia’s invasion of Ukraine, which fueled an oil price spike this month.
The precise language of the Fed’s new policy statement and the details of updated quarterly economic and interest rate projections will provide the first concrete guidance about how all that has influenced policymakers, and in particular whether it has rattled faith that the current economic expansion can stay on track even as inflation is driven lower.
Fed Chair Jerome Powell, speaking to lawmakers in Congress earlier this month, said he felt it was “more likely than not that we…
