The Fed sees a 3-year rate hike next year as it pivots on inflation Business and Economic News

The U.S. Federal Reserve said it is accelerating a reduction in easy money policies and now sees at least three interest rate hikes by the end of 2022.

Easy money is going out of fashion.

The United States Federal Reserve announced at its last annual policy meeting that it would speed up the withdrawal of economic aid from the coronavirus pandemic, announcing that its priorities are to protect the labor market. bladder inflation.

At the end of its two-day meeting on Wednesday, the Fed said it is keeping the benchmark interest rate close to zero (where it has been since the early days of the pandemic), but that it is reducing bond purchases that helped keep it afloat. low cost loans for longer term.

The Fed also released new forecasts for a three-quarter-percent rise in interest rates by the end of next year.

Although accelerated and aggressive forecasts of Wednesday’s rate hike were telegraphed by Fed Chairman Jerome Powell in a testimony before Congress earlier this month, they still signal a drastic change in Fed priorities, disrupted by a lack of crude fuel to feed pandemic inflation. materials and personnel.

Wholesale price inflation hit an all-time high last month, with consumer prices rising at the fastest pace in nearly 40 years.

Meanwhile, the labor market is suffering from a shortage of workers, as companies are struggling to meet an almost record number of job offers. By asking for so many jobs, companies are offering better wages and benefits to attract fewer workers: average hourly wages were 4.8 percent higher in November compared to the same period last year.

Although the US economic recovery is well under way, anti-inflationary winds and supply chain silence are a growing source of concern.