Fed Chief Supports Quarter Point March Rate Increase, Hints at Possible Future Hikes

The U.S. Federal Reserve’s Chair Jerome Powell announced on Wednesday that the Fed will begin “carefully” hiking interest rates this year with the first one set to come into effect after its policy meeting in March. However, he also suggested that the Fed is prepared to implement more aggressive steps to counter rising pandemic-induced inflation.

Calling the Ukraine-Russia conflict a “game changer”, Powell said before the House Financial Services Committee, "There are events yet to come and we don't know what the real effect on the U.S. economy will be."

For now, the Fed will be adhering to its original plan of raising the interest rates by a quarter point after its policy meeting which is scheduled to take place March 15-16 as inflation soars to highest levels since the 1980s. However, the Fed is prepared to raise rates if it shows no signs of mellowing, including hiking rates above the 2.5% mark.

Even as the country’s maximum employment goals have been met, inflation currently stands at three times the Fed’s 2% target which makes it the primary focus for Powell and the Biden administration.

©Photo: Wall Street Journal