WASHINGTON (AP) – Federal Reserve policymakers concluded last month that they would accelerate their tightening of credit if inflation failed to slow in the coming months.
Most officials agreed that faster interest rate hikes would be needed “if inflation does not move down” as the Fed’s policymaking committee expects, according to the minutes of the central bank’s late January policy meeting, which were released Wednesday.
The minutes underscore the urgency that the Fed under Chair Jerome Powell feels about reining in a sharp spike of inflation, which has persisted longer and broadened to more industries than the policymakers had expected. As recently as December, Fed officials forecast that inflation, based on their preferred measure, would fall to an annual rate of 2.6%. It is currently 5.8%.
Most analysts expect Fed officials to raise that forecast at their next meeting, in mid-March, to reflect the acceleration of consumer prices. Inflation has reached its highest pace in four decades, hammering household budgets and wiping out the benefit of rising wages.
Fed officials are expected to raise their benchmark short-term rate several times this year beginning in March. But economists have increasingly suggested that the Fed has waited too long to unleash its inflation-fighting tools.