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Inflation could linger longer than previously expected, Federal Reserve officials discussed in December

By Rachel Siegel

05 Jan 2022 · 3 min read

Federal Reserve officials expect supply chain bottlenecks and labor shortages will continue to hamper the economy and drive up inflation for longer than previously expected, with the omicron variant posing further economic uncertainty, according to minutes released Wednesday from the Fed's December policy meeting.

When Fed leaders convened in mid-December, they made their strongest move yet to tackle inflation, moving up the timeline for what could be as many as three interest rate hikes in 2022. The Fed's policy pivot toward inflation, and away from boosting the job market, marked a significant shift in how the Fed plans to respond to rising costs during the coronavirus pandemic. Fed leaders also sped up the pace at which it is drawing down its vast asset purchase program in March, so it can be better prepared to raise interest rates as early as this spring.

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