(Federal Reserve) US Federal Reserve says it will raise interest rates three times in 2022 in an aggressive policy move aiming to tame rising inflation.
The US central bank also expects three more rate increases in 2023 and two in 2024, although it maintained the rate at the range of 0 to 0.25% while awaiting the end of the asset repurchase.
In a hawkish tone, the Fed says it expects to double the pace of bond buying to $30 billion a month in January in a bid to remove the stimulus early next year.
Fed Chair Jerome Powell says supply and demand imbalances brought by the reopening of the economy and the pandemic are to blame for the elevated cost pressures. He says the inflation has been larger and lasted longer than expected.
Powell says the economy is performing well and is close to full employment, while growth remains above potential, calling for measures to tame inflation which is above target.
The Fed raised its core inflation forecast to 4.4% this year from the current 4.1% but expects it to drop to 2.7% in 2022. The unemployment rate is expected at 4.3% this year and 3.5% in 2022.
Further projections by the Fed also show that the economy will grow by 5.5% in 2021, lower than the initial 5.9% forecast, and further down to 4% next year.
Powell also stressed the uncertainty brought by the Omicron variant, saying the virus may pose a risk to the economy.
Markets react: SPY is up +1.56%, DXY is down -0.18%
