The Fed has warned that a sharp rise in inflation may be needed to curb inflation

The Federal Reserve government may need to raise interest rates “faster or slower” than officials initially expect, as they seek to curb rising inflation and foster economic stability, according to the minutes of their recent meeting.

Minutes from the December meeting of the Federal Open Market Committee released Wednesday show government officials intending to urgently reduce the procurement program set up at the start of the epidemic, to give the central bank a chance to raise interest rates. prices next year.

These minutes provide further details on why the Fed Voltage especially at the end of 2021 to adopt a more comprehensive approach to clearing its reserves in the financial markets and how the central bank can continue this year with various changes.

Sales in U.S. stocks plummeted after the release minutes, with S&P 500 1.2 percent lower on the day and the Nasdaq Composite heavy performance less than 2 percent.

The December meeting also highlighted the first round of talks about the Fed’s financial system, which has doubled since early 2020 and is now moving below $ 9tn.

The minutes show the Fed’s significant contribution to starting its spending cuts after the first interest rate. Some have suggested that the move could take place “soon” later.

“Participants felt that the uncertain future of the process could be justified and that the committee should show greater commitment to addressing the cost crisis,” he said.

According to the so-called dot plot of individual interest rates released by the Fed after their December meeting, officials wait to raise interest rates three times next year, with another three-fold move recorded in 2023 and two more in 2024.

In September, Fed officials shared a similar sentiment with hopes of raising the policy from a level close to zero this year.

Christopher Waller, governor of the US central bank, later he urged the first climb could come in early March, when the incentive program ends.

Based on the minutes, the policy makers emphasized the importance of staying flexible in the face of future policy changes, especially due to the economic downturn.

“Participants realized that, based on their perceptions of the economy, the labor market, and inflation, it would make sense to raise federal funds faster or faster than expected,” he said in a statement.

The price hike has come in at a much stronger rate than Fed officials expected in the early days of the epidemic. Recent polls suggest a growing risk that causes U.S. consumer prices to remain stable.

This moment demonstrates a special concern that the barriers to supply and the decline in employment that have contributed to inflation can “be longer and more widespread than previously thought”.

At a press conference following the December meeting, Jay Powell, chairman of the Fed, said the same inflation rate was “not at all” what the Fed was looking for when it announced in August 2020 that it would allow inflation to rise. for past periods that have existed for as long as 2 percent.

One of its favorite measures, the value proposition (PCE) index, recorded 5.7 percent year-on-year in November, the highest level in nearly 40 years.

Fed officials have raised their forecast for inflation accordingly, and a major strategy – which eliminates unstable items such as food and energy – which is now expected to settle to 4.4 percent in 2021 before falling to 2.7 percent by the end of 2022. FOMC members and other presidential branches ‘The regions also reduced their unemployment rate, which currently stands at 4.2 percent. By the end of 2022, it is expected to drop to 3.5 percent.

The central bank is committed to keeping interest rates close to zero until it achieves 2 percent inflation over time and big business.

The first line was “more than it was achieved”, the minutes said, with “many” seeing the labor market trends already “closely linked” to the second goal.

Some participants also suggested that the Fed could raise interest rates before the big deal, especially if inflationary pressures continue.