![Fed sharpens inflation-fighting tools as rate hikes near](https://www.portugalcolonial.pt/media/shared/articles/51/b8/e9/Fed-sharpens-inflation-fighting-too-326101.jpg)
-
Jamaica's De Cordova-Reid joins Leicester from Fulham
-
Wolves' Kilman reunites with Lopetegui at West Ham
-
Schmidt reign off to winning start as Australia beat Wales 25-16
-
Russian wrestlers reject Olympics invitation
-
Raducanu rediscovers Wimbledon 'fun' factor after turbulent spell
-
Winning all that matters at Euro 2024 for Mbappe's minimalist France
-
Eight dead, two million affected by Bangladesh floods
-
Robertson pleased to 'find a way' past England in tough Test baptism
-
Martin sets lap record to secure German MotoGP pole
-
'Shattered' Germany set sights on World Cup after Euros exit
-
Olympic hope Pedersen pulls out of Tour de France
-
Djokovic eyes sweet 16 at Wimbledon as Swiatek takes on 'gangster'
-
End beckons again for Ronaldo after Portugal Euros KO
-
New Zealand edge England 16-15 in tense, brutal first Test
-
Turkey take on Dutch in politically charged Euros quarter-final, England face Swiss
-
Calling for better ties with West, Iran reformist wins presidency
-
Cybercrime groups restructuring after major takedowns: experts
-
Activists hail Sierra Leone child marriage ban, urge action on FGM
-
Marsch relishing Canada's semi clash with Argentina
-
Canada stun Venezuela on penalties to reach Copa semis
-
Iran reformist Pezeshkian holds early lead in runoff vote
-
Swiatek faces 'gangster' threat, Djokovic feels need for Wimbledon speed
-
France holds its breath ahead of uncertain vote
-
Starmer begins UK 'rebuild' after landslide election win
-
Paris's Moulin Rouge inaugurates new windmill sails ahead of Olympics
-
Pan, Rai share halfway lead in PGA John Deere Classic
-
'I was feeling terrible' in debate, Biden says in TV interview
-
France coach Deschamps savours ending penalty hoodoo, defends Mbappe
-
Thompson bids farewell to Warriors after exit
-
Portugal exit Euros with pride, will return stronger: Martinez
-
UK's new PM Starmer speaks to world leaders, names top team
-
Spain and France to face off in Euros last four, Turkey lament 'unfair' Demiral ban
-
Israel says negotiators to hold fresh Gaza truce talks next week
-
France beat Portugal on penalties to reach Euro 2024 semi-finals
-
Endrick to start for Brazil in Uruguay Copa clash: Dorival
-
Heartbreak for Germany fans after dramatic Euros exit
-
Beryl heads for Texas after causing damage, no deaths in Mexico
-
Nagelsmann laments late penalty decision as hosts Germany exit Euros
-
Biden declares he's all in ahead of high-risk TV interview
-
Spain team 'is a winning horse', says De la Fuente
-
Bows at the ready, Chad villagers battle kidnappings
-
Alcaraz mimics Bellingham goal celebration after Wimbledon win
-
Olmo hopes Pedri can make speedy return for Euros semi-finalists Spain
-
Retiring Kroos hopeful despite Germany's 'bitter' Euros exit
-
Southgate turns on English 'entitlement' over claims of easy Euros draw
-
Merino extra-time goal sends Spain past Germany to Euro semis
-
Koeman demands Dutch silence fervent Turkish fans at Euros
-
Brad Pitt at Silverstone for filming of F1 movie
-
Raducanu storms into Wimbledon last 16
-
California fires spread in July 4 weekend heatwave
![Fed sharpens inflation-fighting tools as rate hikes near](https://www.portugalcolonial.pt/media/shared/articles/51/b8/e9/Fed-sharpens-inflation-fighting-too-326101.jpg)
Fed sharpens inflation-fighting tools as rate hikes near
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.
- Hawkish or dovish? -
In recent weeks, Fed officials have given strong signals that once the tapering concludes in March, they will hike the benchmark lending rate for the first time since they slashed it to zero in March 2020 at the start of the Covid-19 pandemic.
"The move towards a March rate increase is pretty clear -- and I expect Powell in his press conference (Wednesday) to reinforce that perception," said David Wessel, a senior fellow in economic studies at the Brookings Institution.
Hiking could help contain consumer prices that spiked seven percent in 2021, with costs for gasoline, food, housing and used cars shooting up.
But the question remains as to how many times the Fed will increase rates.
The causes of the inflation are myriad, from global issues such as the semiconductor shortage to more domestic concerns like a scarcity of workers and the massive government outlays during the pandemic that have fattened Americans' wallets and boosted demand.
"If there's any mention of the persistence of inflation, that would also be an indication that the Fed is not just ready for lift off but that they want to fly high," Beth Ann Bovino, US chief economist at S&P Global Ratings, said in an interview.
FOMC members released forecasts at the December meeting indicating most expect three rate hikes this year, though many private economists now expect four.
Another sign would be if central bankers say the labor market has returned "maximum employment" after the mass layoffs that struck as the pandemic began, Bovino said.
- Omicron uncertainty -
Some traders are speculating the Fed could announce an early end to the tapering process and a surprise rate hike at next week's meeting, or opt to hike twice as much as they typically do at the March meeting.
But with complications from Omicron already evident, including a slump in retail sales during the December holiday season and an uptick in new unemployment benefit applications last week, Shepherdson doubts Powell would want to change tack.
"Why would he do that? It would be really perverse given the uncertainty," he said.
A.Santos--PC