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Fed report reiterates FOMC’s plan to raise rates in March
The Federal Reserve Friday published its Monetary Policy Report to Congress which contains discussions of "the conduct of monetary policy and economic developments and prospects for the future." The report, delivered twice a year, notes that price increases have broadened since last year, with inflation running above the Federal Open Market Committee’s (FOMC) longer-run objective of two percent.
“The Federal Reserve’s semiannual report reiterates the FOMC’s intention to raise rates at the upcoming meeting next month,” stated NAFCU Chief Economist and Vice President of Research Curt Long in response to the report. The report also adds that upward pressure on inflation from prices of goods experiencing supply chain bottlenecks, which has dampened the economy for the majority of the past year, and strong demand has continued.
“To no one’s surprise, the report devotes plenty of space to inflationary pressures resulting from constrained labor supply, supply chain bottlenecks, and the residual effect of strong fiscal stimulus earlier in the pandemic,” added Long. “Nothing in the report suggests any degree of panic over inflation that would necessitate significantly front-loading rate hikes, and NAFCU expects 25 basis point hikes at each of the next four FOMC meetings, followed by a slower pace of hikes thereafter.”
Federal Reserve Chairman Jerome Powell will present the Fed's semiannual Monetary Policy Report and serve as a witness at this week’s House Financial Services Committee hearing on Wednesday and Senate Banking Committee hearing on Thursday.
NAFCU will monitor both hearings and share any key findings related to credit unions.