The Federal Reserve has significantly increased its expectations for inflation this year following massive government spending from Democrat President Joe Biden.
On Wednesday, The Federal Reserve “considerably raised its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates,” CNBC reported. “However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program, though Fed Chairman Jerome Powell acknowledged that officials discussed the issue at the meeting.”
Officials said that increases in interest rates could come as soon as after the 2022 midterms in 2023. However, they previously said that interest rates would not increase until at least 2024.
“This is not what the market expected,” James McCann, deputy chief economist at Aberdeen Standard Investments, told CNBC. “The Fed is now signaling that rates will need to rise sooner and faster, with their forecast suggesting two hikes in 2023. This change in stance jars a little with the Fed’s recent claims that the recent spike in inflation is temporary.”