US Federal Reserve May Opt For More Interest Rate Hikes To Tackle Inflation: Report

Just days after the Reserve Bank of India (RBI) came up with its announcement of repo rate hike, the US Federal Reserve’s outlook on rate hike is back in the news. As per media reports, at this point, the US Fed officials are anticipating more interest rate hikes as the government continues its battle with inflation. 

According to a Bloomberg report, the Federal Reserve officials are expecting further increase in borrowing costs as the authorities want to bring inflation down to their 2 per cent target. While most officials supported a slower pace of hike, hardly anyone ruled out more hikes. 

It adds that as per the minutes of the January 31-February 1 US Federal Reserve meeting, almost all the officials agreed to raise the interest rates by 25 basis points (bps). In addition to this, the minutes of the meeting also reportedly indicated that the Federal Reserve was relatively more concerned about the risk of inflation staying elevated than the economy entering a phase of recession. 

“Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time,” Bloomberg quoted minutes of the meeting as saying. 

It must be noted that inflation has been a rather sticky and difficult to manage issue for several world economies. With disruptions in the global supply chain, the Russia-Ukraine war and several other factors bringing a slowdown in the economy, several countries have been grappling with inflation and mass layoffs across sectors.