The central bank is expected to declare a significant shift in its policy today that will clear the road for a first interest rate increase in 2022.
Markets are expecting the Federal Reserve will speed up the closing of its bond-buying program and may change the closing date from June to March.
That will free the federal reserve to start increasing interest rates from zero. Central bank officials are anticipated to release a forecast of 2 to 3 interest rate increases in 2022 and maybe another 3 to 4 in 2023.
At the closing of Fed Reserve’s two-day meeting on Wednesday afternoon, it is anticipated to acknowledge that inflation is no longer the temporary problem and that increasing prices could be the biggest threat to the economy. The consumer price index increased 6.8% in November month, and it could be a high increase again in December.
“I think getting out of the easing business is very much overdue,” said Rick Rieder, a chief investment officer of global fixed income at BlackRock.
The central bank put its quantitative easing program in place for fighting the effects of the Covid-19 pandemic at the start of 2020.