JANUARY 17, 2022 – AS INFLATION SOARS, THE FED CONFIRMS ITS NEED TO ACT
The central bank has confirmed their focus has shifted to controlling the persistent inflation that has taken hold. In her confirmation hearing last week, Federal Reserve Governor Lael Brainard told Congress efforts to reduce inflation are the Fed’s “most important task.” It is expected the first rate increase will be announced at the Fed’s March 15-16 meeting, as the Fed ends its asset-buying stimulus program.
The Fed’s rate-setting committee “has projected several hikes over the course of the year. We will be in a position to do that as soon as asset purchases are terminated,” said Ms. Brainard. “And we will simply have to see what the data requires over the course of the year.” She further said, “Our monetary policy is focused on getting inflation back down to 2 percent.”
Consumer prices rose 7 percent in December, year-over-year, the third straight month it exceeded 6 percent. Economists are expecting inflation to average 5 percent in 2022, cooling at the end of the year to around 3 percent.
Currently half the economists polled expect three rate increases this year, while one-third think there will be more than three. It is a good time to review your interest rate obligations for the upcoming year and investigate how interest rate hedges can help you lock in the historically low rates before the Fed takes action.