Fed sharpens tools to fight inflation
The Federal Reserve has its inflation-fighting weapons ready to fire, and when the US central bank's policy committee convenes this coming week, the focus will not be on whether they will pull the trigger but rather how many times.
With the Omicron variant of Covid-19 adding to economic uncertainty and fueling a spike in consumer prices rose not seen for decades, the Fed's decision Wednesday will be closely scrutinized for signs policymakers will take more aggressive steps to contain inflation.
The policy-setting Federal Open Market Committee (FOMC), which opens its two-day meeting on Tuesday, is widely expected to begin hiking interest rates in March, though a few economists note the possibility of early action.
"I think it's kind of a holding operation rather than a blockbuster meeting, but the March one will be more fun," Ian Shepherdson, chief economist at Pantheon Macroeconomics, told AFP.
Only months ago, Fed Chair Jerome Powell and other top officials were arguing that the sharp rise in inflation would be "transitory," but that stance grew increasingly shaky with each new data report showing prices rising and spreading to many goods, beyond cars and energy.
By the end of 2021, policymakers conceded they had miscalculated and pivoted, announcing they were ready to attack inflation head on.
They started by tapering the bond buying program implemented to stimulate the economy, and accelerated the pace of the wind down at their last meeting in December.
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