Fed backs March Liftoff

Federal Reserve Chair Jerome Powell said the central bank was ready to raise interest rates in March and didn’t rule out moving at every meeting to tackle the highest inflation in a generation. “The committee is of a mind to raise the Fed funds rate at the March meeting” if conditions are there to do so, Powell told a virtual press conference on Wednesday, while noting that officials have not made any decisions about the path of policy because it needs to be “nimble.”

He was speaking after the Federal Open Market Committee concluded its two-day meeting with a statement that declared “it will soon be appropriate to raise the target range for the federal funds rate,” citing inflation well above its 2% target and a strong job market.

In a separate statement, the Fed said it expects the process of balance-sheet reduction will commence after it has begun raising rates. Powell said no decision was taken at this meeting on the pace of the runoff or when it would start.

The hawkish pivot, against a backdrop of turmoil in stocks, comes amid consumer inflation readings that have repeatedly surprised and hit 7% -- the most since the 1980s -- and a tight labor market that’s pushed unemployment down faster than anticipated to almost its prepandemic level.

In his second term, Powell, 68, will need to persuade investors and the American public that the FOMC can successfully get inflation back down to the Fed’s 2% goal while also nurturing job gains as the labor market heals from the pandemic.