FX.co ★ Fed governor Waller: Fed to decide on rate hikes in March

Recently published details about the Federal Reserve’s policy adjustment suggest the regulator raise interest rates at least three times in 2022.

“Three hikes is still a good baseline; we will have to wait and see what inflation looks like in the second half of the year,” Fed governor Christopher Waller told Bloomberg. Earlier, US consumer prices gained 4.7% in November, despite high inflation. He found raising the key rate by 25 basis points in March to be appropriate. In March, the Fed is planning to fully wind down its asset purchase program. “The pandemic is really throwing a wrench into how we want to think about things going forward,” Waller added. Eventually, the regulator will have to reconsider its new framework if inflation stays high. The Fed governor ruled out a 50 basis point hike, pointing out that one of the Fed’s key goals is not to surprise markets. Even though a large rate increase could be in the regulator’s tool kit, it would take a lot for the Fed to move in that direction, he concluded.