Source: Construction Dive —
Fed policymakers Wednesday signaled their intention to reduce price pressures by raising the federal funds rate from a record near-zero low at their next meeting on March 15-16.
“We’re committed to our price stability goal,” Fed Chair Jerome Powell said at a news conference. “We will use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”
Central bank officials last month tentatively planned three, quarter-point increases to the main rate this year. Since Powell’s comments yesterday, financial markets indicate expectations for five such increases in 2022, Peterson said during a webcast.
“Even if the Fed hikes four or five times, we’re looking at a fed funds rate of 1.25%,” Peterson said. “That’s still very accommodative.”
Several inflationary forces will probably persist in coming months even if supply chain bottlenecks and other disruptions wane with any retreat by the coronavirus, she said.
“We’re seeing wages rise very aggressively in the U.S., and that’s a function of labor shortages,” she said, noting that the pool of U.S. workers aged 15 to 64 has shrunk since early 2020.
Also, the global supply of semiconductors will likely remain low after the pandemic, and “we would not be surprised that for the next several years we would see upward pressure on prices for chips,” she said.