WASHINGTON (Reuters) – The Federal Reserve is expected on Wednesday to signal plans to raise interest rates in March as it focuses on fighting inflation and sets aside, at least for now, economic risks posed by the ongoing coronavirus pandemic, a bout of market volatility, and Western fears of a Russian invasion of Ukraine.
The policy decision, due to be released at 2 p.m. EST (1900 GMT) after a two-day meeting, won’t commit the U.S. central bank to a particular course of action when its rate-setting committee meets again in seven weeks.
But absent a marked change in the course of the economy the Fed is likely at its March meeting to start withdrawing its pandemic-era support, banking that a combination of higher interest rates and a smaller central bank presence in financial markets will help slow the pace of price increases.
Graphic: The COVID inflation surge The COVID inflation surge, https://graphics.reuters.com/USA-FED/INFLATION/akvezawxopr/chart.png The meetings before such policy actions are typically used to telegraph what’s coming.
With U.S. inflation “very high” and the unemployment rate now just 3.9%, Fed Chair Jerome Powell and his colleagues “will talk up the economy without sounding apocalyptic on inflation and prepare the ground for a March liftoff” of interest rates, Cornerstone Macro economist Roberto Perli wrote in a note ahead of the decision. They are likely also to continue debating how and when to reduce the central bank’s massive holdings of Treasury…
