The Fed is likely to signal a March interest rate hike and that further policy tightening is coming

The Federal Reserve is expected to say this week it is moving forward with interest rate hikes and considering other policy tightening, reversing the easy policies it put in place to fight the pandemic. The Fed begins its two-day meeting Tuesday and on Wednesday afternoon, the central bank is expected to issue a new statement that shows it is resolved to fight inflation. Against the backdrop of a violent stock market correction, Fed officials are expected to say they are ready to push up the fed funds rate from zero as soon as March. “We don’t expect them to sound dovish,” said Mark Cabana, head of U.S. short rate strategy at Bank of America. “The [bond] market seems to be reacting to the drop in equities plus the geopolitical tensions so maybe the Fed sounds not as hawkish as they otherwise would have. But we don’t think the Fed is going to come out and tell the market it’s wrong for pricing in four rate hikes this year.”
Source: CNBC