Fed sees “justified” advancing the rate hike due to high inflation

The minutes of the last meeting of the Federal Reserve (Fed) The US, published this Wednesday, indicate that its top officials see “justified” to advance an increase in interest rates – currently in the range of between 0% and 0.25% – due to high inflation.

“The participants (in the meeting) pointed out that, based on their individual projections for the economy, the labor market and inflation, it could be justified to advance or increase the rate of the rise in interest rates with respect to what was previously anticipated” , describes the document.

After a two-day meeting of the governors of the US central bank that ended on December 15, the Fed left interest rates unchanged for the moment in the range of between 0% and 0.25%, despite inflation being reduced. in November it reached an interannual rate of 6.8%, the highest figure in almost 40 years in the country.

However, the agency did accelerate the reduction of its bond purchase program, one of the monetary stimuli that it launched in the face of the crisis caused by the COVID-19, and announced that it plans to remove it entirely in March of this year.

“The economy is robust and no longer needs this monetary support,” said the Fed chairman at the time, Jerome Powell, which in turn defended leaving the types as they are at least until the end of the stimulus program.

The minutes of the December meeting also reveal that several of the governors defend that, once the rates begin to rise, they proceed shortly after to reduce the amount of Treasury obligations owned by the Fed, which currently hovers around US $ 8.75 billion.

“Some participants also indicated that it could be convenient to start reducing the size of the Fed’s balance sheet relatively soon once interest rates begin to rise,” the document published this Wednesday detailed.

The Fed’s next monetary policy meeting will take place on January 26-27.