Fed Reserve likely to hike interest rates, end asset purchases in March

US Federal Reserve building

The Federal Reserve said it will likely be appropriate to start raising the US interest rate as soon as in March this year.

With inflation well above 2% and a strong labor market, the Federal Open Market Committee (FOMC) expects it will soon be appropriate to raise the target range for the federal funds rate,” the central bank said in a statement.

However, the Fed reiterated its warnings about the continued risks to the economic outlook, including the new variants of COVID-19.

In addition, FOMC noted the central bank’s monthly bond-buying will proceed at just $30 billion in February, indicating that program is expected to end in March.

The committee further noted that the balance sheet reduction will happen after rate increase starts.

The Fed slashed its benchmark rate to a target of 0%-0.25% in the early days of the pandemic, in a decision that came in line with the expectations.