London, Tuesday, 5 April 2022
Governor Lael Brainard of the Federal Reserve stated the Fed would continue to tighten monetary policy with a series of interest rate hikes and will begin rapidly shrinking the balance sheet as soon as next month.
According to prepared remarks for her speech to the Minneapolis Fed, Brainard expects the combined effect of rate hikes and balance sheet reductions to bring the policy stance to a more neutral one later this year.
Brainard also stated that bringing inflation down is critical, as it is far too high and subject to risks on the upside.
For the first time in three years, the Fed lifted the fed funds rate target by a quarter-point to 0.25 percent -0.5 percent during its March 2022 meeting, signalling that rate hikes would continue.
The Fed now expects to raise rates at each of the next six meetings this year, with the fed funds rate reaching 1.9 percent by the end of the year.
(Source: Federal Reserve // Edited by: The Decision Maker)