Federal Reserve leaves gradualism behind

The details of the Fed’s pivot toward more aggressively fighting inflation marked a step toward greater urgency and agility – and toward smashing market perceptions that the central bank is losing its grip on surging prices.

NEW YORK: United States Federal Reserve (Fed) officials are preparing to move faster than their previous round of tightening to keep a high-inflation and a near-full-employment economy from overheating, leaving behind the gradualism that marked the central bank’s approach in the prior decade.

Prospects for another year of growth above the economy’s speed limit with inflation already high – along with a larger balance sheet that’s suppressing longer-term interest rates – “could warrant a potentially faster pace of policy rate normalisation,” minutes from the Dec 14-15 Federal Open Market Committee (FOMC) meeting said.