U.S. central banks have warned of a rise in interest rates in March, according to Reuters

Author: Ann Saphir

(Reuters) – With inflation nearing a 40-year high, US central bankers are joining forces on a plan to curb economic growth as early as March, which is likely to tighten further monetary policy as the year progresses.

On Wednesday, the president of the Federal Reserve Bank of San Francisco, Mary Daly, became the central banker of the United States with a view to raising the rate in the coming months.

“It’s really time for the U.S. central bank to start removing some of the accommodation we’ve given to the economy,” he said in an interview with PBS NewsHour. “I certainly see rate hikes coming, even in March.”

Coming from Daly, which was politically demanding as in November in the face of rising prices, the remarks are a clear sign that Fed officials are ready to end the era of a near-zero interest rate pandemic.

In December, Fed officials took a step back from the incident, agreeing to end bond purchases by March, and said interest rates could rise threefold this year.

Bonds have been buying bonds since the start of the pandemic to ease financial conditions and lower borrowing costs, giving the economy more stimulus than just low short-term rates.

But rapid price hikes and a record expansion of COVID-19 are eager to act on options that could worsen the supply chain disruption that is fueling inflation.

U.S. consumer prices rose 7% from a year earlier in December, a government report showed early Wednesday, the fastest pace in nearly 40 years.

‘WE CAN LAST’

In an interview released early Wednesday, Atlanta Fed Chairman Raphael Bostic said the Fed expects rates to rise threefold this year, starting in March, published earlier on Wednesday, Fed Chairman Raphael Bostic said Fed that he expected to climb three times. this year, starting in March, and rapidly reducing the Fed’s massive balance sheet.

St. James Bullard The president of the Louis Fed told the Wall Street Journal that he sees four rate hikes on the same day, starting in March, as a likely scenario. He said he expected a three-rate hike last week.

And Cleveland Fed Chairman Loretta Mester told the Wall Street Journal on Wednesday that she supports the start of rate hikes in March and a reduction in the Fed’s balance sheet “as fast as we can condition on the financial markets.”

They are not the only Fed Bank chairmen in the region, whose views sometimes contradict Washington’s main group of Fed policymakers.

“The economy no longer needs or wants the very flexible policy we have put in place to deal with the pandemic and its aftermath,” Fed Chairman Powell said at a hearing in the U.S. Senate on Tuesday, pointing to upcoming rate hikes. as well as a $ 8 trillion reduction in the Fed’s balance sheet.

And in a statement released ahead of his nomination hearing on Thursday, Fed Governor Lael Brainard said controlling inflation “while sustaining an all-inclusive recovery” is the Fed’s most important task.

With the U.S. unemployment rate at 3.9% and strong consumer demand, Fed officials expect a reduction in inflation without hurting economic recovery or financial market stability.

“If you don’t see the March rate hike right now, you’re crazy and nothing the Fed can say will help you now,” said Tim Duy, chief economist at SGH Macro Advisors, ahead of most Fed officials. said those who spoke on Wednesday.