US Federal Reserve poised to raise interest rates in March

Washington, Jan 26 (EFE).- The Federal Reserve said Wednesday that the benchmark interest rate in the United States will remain in the range of 0-0.25 percent for the moment, but signaled that it will likely increase the rate in March to tamp down inflation.

Though the official statement following the meeting of the Federal Open Market Committee – the central bank’s policymaking body – said that a rate hike could come “soon,” Fed Chair Jerome “Jay” Powell was more specific.

“I would say that the Committee is of a mind to raise the federal funds rate at the March meeting, assuming that conditions are appropriate for doing so,” he told a press conference. “We have our eyes on the risks, particularly around the world.”

Powell acknowledged that the Omicron-fueled surge of Covid-19 is having an economic impact.

“We do expect some softening in the economy from Omicron, but we think that that should be temporary, and we think that the underlying strength of the economy should show through fairly quickly after that,” the Fed chair said.

He said that the level of dynamism in the US labor market is such that the Fed has some latitude to boost interest rates without harming employment.

The Federal Reserve is obliged by law to pursue maximum employment while simultaneously managing inflation. Under Powell and his recent predecessors, the Fed has set a target of “inflation at the rate of 2 percent over the longer run.”

After more than a decade when inflation ran at 2 percent or lower, the US ended 2022 with the 12-month inflation rate at 7 percent, the highest in four decades.

Speaking earlier this month during a Senate hearing on his nomination for a second term as head of the central bank, Powell said that in the current situation, the Fed needs to prioritize curbing inflation. EFE arc/dr