Fed officials have signaled that interest rates may need to be raised sooner than expected in the face of inflationary pressure, according to minutes of the December 14-15 monetary policy meeting released on Wednesday. (5).
The document also indicates the US Central Bank’s intention to reduce its overall asset portfolio.
The minutes offer more details on the Fed’s shift in direction last month towards a more aggressive monetary policy against inflation.
Monetary policymakers agreed to accelerate the end of the bond purchase program — implemented at the beginning of the pandemic — and forecast an early rate hike, reaching 0.75 percentage point during 2022.
The document also shows that the Fed not only discussed an initial interest rate hike, but also whether to use a second mechanism to contain inflation by allowing its allocations to Treasuries and mortgage-backed securities to decline.
The December meeting was held as the Covid-19 case count began to rise due to the spread of the omnin variant.
Infections have risen very rapidly since then, and there have still been no comments from senior Fed officials to indicate whether the change in the health situation has altered their views on appropriate monetary policy.
Fed Chair Jerome Powell will appear before the Senate Banking Committee next week for a hearing on his nomination for a second four-year term as head of the body.
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