February 21, 2022 — Fed Disregards Half-Percent Rate Increase in March


Many investors have been betting on a 0.5 percent rate increase in March, but the Fed pushed back.

New York Fed President John Williams spoke Friday and said, “There’s really no kind of compelling argument that you have to be faster right in the beginning. We can steadily move up interest rates and reassess.”  Williams suggested the Fed can raise rates in more measured quarter-point increments.  Fed Governor Brainard confirmed it’s appropriate to start a series of increases, while Cleveland Fed President Mester said the Fed could consider larger moves later if inflation doesn’t soften by the second half of the year.

The Fed will be looking at the February hiring and inflation reports, due to be released before the March 15-16 meeting, to determine how much rates will rise.  The threat of a Russian invasion of the Ukraine may send global markets into turmoil and drive inflation higher through energy costs.

It looks like interest rates will be higher in four weeks. Take the time to review your future interest rate obligations now, and see if you can lock in today’s rates through the use of interest rate hedges.