US Federal Reserve seen taking a step toward March rate increase

US Federal Reserve seen taking a step toward March rate increase

Washington: Jerome Powell and his fellow Federal Reserve policy makers are expected to signal their first interest-rate hike since 2018, paving the way for a March move as the US central bank tries to extinguish red-hot inflation. Financial markets in the coming week will get another read on US inflationary developments when the government issues employment cost data for the fourth quarter. Economists project another solid increase in wages and benefits after the index jumped by a record 1.3 per cent in the prior three months. A separate report is expected to show that US economic growth accelerated at the end of 2021 after a mediocre third-quarter performance, fueled mostly by a pickup in inventories and a modest gain in consumer spending. Powell and his colleagues have hastened their withdrawal of pandemic support in a hawkish pivot to control price pressures, even as the omicron variant of Covid-19 has hampered economic activity in the early weeks of the new year. Economists expect them to conclude the Fed’s bond-buying programme on schedule in March, and also raise rates from near zero at their meeting that month. Some say that an aggressive half-percentage-point hike is warranted to bolster the central bank’s inflation-fighting