Citing Inflation and Jobs Growth, Federal Reserve Signals Interest Rate Hike 'Soon'

With “inflation well above 2 percent and a strong labor market,” the Federal Reserve suggested Wednesday that it would soon raise its benchmark interest rate. Many experts expect the rate hike to come in March.  

“Progress on vaccinations and an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation,” the central bank said in a statement. Key to the Fed’s interest rate decision is the fear that higher rates would hurt economic growth and employment; major stock indexes turned negative on Wednesday after the central bank’s announcement. Addressing those concerns, Fed Chairman Jerome Powell said, “I think there’s quite a bit of room to raise interest rates without threatening the labor market.” The benchmark interest rate in question is the federal funds rate, the rate at which banks lend to each other overnight to meet asset reserve requirements. The Fed last raised interest rates in December 2018.

Coverage was mostly balanced and more common in business-focused outlets. Coverage in some outlets on the right emphasized 2021’s high inflation; a Fox Business (Lean Right) headline included the phrase “interest rate hike could come 'soon' as inflation rages.”