By director and do e Federal e Reserve e Lael
(Reuters) – Federal Reserve Director Lael Brainard said on Thursday that the U.S. central bank is in a position to initiate what could turn out to be several rate hikes this year “as soon as” it completes its bond-buying program. titles, scheduled for March.
“The (Fed’s monetary policy-setting) committee has projected several (rate) increases throughout the year,” Brainard said in testimony before the Senate Banking Committee.
“Of course we will be in a position to do that I think as soon as our purchases are closed, and we will simply have to see what the data requires throughout the year, and you know we have started to discuss reducing our balance sheet,” she said. .
Brainard also said he expects the current wave of high inflation to persist over the next two quarters. His comments came in response to a question from a senator during his Fed vice-chair nomination confirmation hearing.
The central bank, at the end of last year, began to reduce its purchases of Treasuries and mortgage-backed securities and is on track to complete this process in March.
Minutes from the Fed’s last monetary policy meeting of 2021 indicated that policymakers were increasingly anxious to deal with the inflation rate, which is more than twice above the flexible annual target of 2%.
Several Fed officials have since publicly advocated for interest rate hikes to begin at the March 15-16 monetary policy meeting. Brainard appeared to signal that it is ready to act on interest rates immediately following the completion of the bond-buying reduction.
The central bank cut its benchmark interest rate to near zero in March 2020 and launched a large-scale asset purchase program to protect the economy from the blow caused by the onset of the coronavirus pandemic.
On Tuesday, at his confirmation hearing before the same group of senators for a second term as Fed chief, Jerome Powell said the economy no longer needs such broad support.
(By Dan Burns)
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