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Fed hints at rate hike in March | Financial

For now, the Fed has kept interest rates in the range of 0 to 0.25%, even though inflation at 7% is a lot higher than the 2% that the central bank is aiming for.

The Fed also announced that it would stop buying new bonds. In February, the central bank will buy at least $30 billion in US debt, but that will stop from March. And once interest rates go up, the Fed also wants to reduce its balance sheet. The amount of bonds maturing now will be reinvested. But Powell and co want to gradually reduce that.

Investors had been anxiously awaiting the meeting for days. Global stock markets plunged in fear of higher interest rates.

Last month, the Fed assumed three rate steps in 2022, then three more in 2023, and two in 2024. But inflation has only risen further since then, so a faster path to higher interest rates is also being taken into account.

The Fed’s accommodative policy during the pandemic caused interest rates to fall, prompting many investors to switch to equities. But those favorable conditions seem to be turning.

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