Federal Reserve Board Governor Lael Brainard. Source: Reuters
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  • US Federal Reserve officials nod to a March start to a series of interest rate hikes in 2022 as inflation continues to pressure the economy
  • While the bank flagged its plans to raise interest rates in December, Governor Lael Brainard say the first rise will likely come as soon as an asset purchasing program is terminated
  • The bank previously flagged plans to purchase its final tranche of government securities in February, meaning interest rates could begin to rise after its March 15-16 policy meeting
  • Meanwhile, Chicago Fed President Charles Evans on Thursday said the three planned rates hikes were a good “opening bid”, but a fourth increase could be on the cards
  • The comments are likely the last to come from Fed officials ahead of their January 25-26 policy meeting

US Federal Reserve officials have nodded to a March start to a series of interest rate hikes in 2022 as inflation continues to pressure the economy.

Investors have been thoroughly dissecting comments made by Fed officials this week to get an indication as to when, and how severely, monetary policy will tighten to curb inflation.

The central bank flagged its plans for three 2022 interest rate increases back in December, but Governor Lael Brainard has signalled that the first of these rises will likely follow the bank’s March 15-16 policy meeting.

Ms Brainard, who is potentially up for a position as the Fed’s vice chair, said the bank will be in a position to raise interest rates “as soon as our purchases are terminated”, referring to a separate Federal Reserve asset purchase program due to end in March.

The bank has previously announced plans to purchase its final tranche of government securities in February.

With Labor Department Data this week highlighting a 7 per cent increase in the Consumer Price Index in the year to December 2021, it seems Federal Reserve officials are more eager than ever to get on top of ongoing inflation lest it becomes “entrenched”, as per comments recently made by Fed Chair Jerome Powell.

The rates increases will come alongside the central bank’s plans to shrink its US$9 trillion (A$12.4 trillion) stash of assets.

Alongside Ms Brainard signalling March as the date for the first rise, Chicago Fed President Charles Evans on Thursday said the bank was in a situation where its stance of monetary policy was “wrong-footed” against inflation, according to a Reuters report.

Mr Evans said the three quarter-percentage-point increases were a good “opening bid” for easing inflation, but a fourth hike could be on the cards if inflation does not improve quickly enough.

The comments are likely the last to come from Fed officials ahead of their January 25-26 policy meeting.

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