US Federal Reserve to raise interest rates as early as next year

A view of the Federal Reserve System in Washington, DC. New York Shinhwa=Yonhap News
The U.S. central bank, the Federal Reserve (Fed), said on the 22nd (local time) that it could begin tapering its asset purchases soon. It is a flow in which the tapering start signal becomes clearer. Although the policy of ‘zero interest rate’ was maintained, it also hinted that if the timing of an interest rate hike is early, it may be accelerated to next year. In a statement after the Federal Open Market Committee (FOMC) meeting, the Fed said, “If progress continues as broadly as expected, the committee believes that a slowdown in the pace of asset purchases will soon be justified.”
The Fed has been working to curb long-term interest rates since last year’s COVID-19 crisis. It’s buying $120 billion of bonds every month, which means it could start reducing its asset purchases sooner or later. With the US consumer price inflation more than double the Fed’s target of 2% and inflationary pressures rising, the demand for tapering is also rising.

The base rate was frozen at the current 0.00-0.25%. According to the unanimous decision of the FOMC members, the interest rate has been fixed at zero for a year and a half since March of last year. The Fed also presented the possibility of a rate hike in 2022 in a separate dot plot. In this dot chart, 9 out of 18 members predicted an interest rate hike next year.