News Number of the Day Fed to Speed Up Rate Increases Amid Soaring Inflation Number of the Day: The most relevant or interesting figure in personal finance By Diccon Hyatt Updated on March 24, 2022 Fact checked by Helen Reis Fact checked by Helen Reis Helen is the senior news editor for The Balance and a veteran journalist with more than 17 years of experience, mostly in business and finance news. She is passionate about making complicated topics easy for everyone to understand and compulsive about accuracy and transparency. learn about our editorial policies That’s how soon the Federal Reserve’s benchmark interest rate may reach a 14-year high, showing just how quickly the central bank now plans to raise borrowing costs. The central bank made its pivot to inflation-fighting mode from economic stimulus mode official Wednesday when it raised its benchmark interest rate from virtually zero, the first increase since 2018 and a widely expected move. But what surprised many economists was the trajectory of the increases it’s still planning. Future hikes will be faster than the Fed previously predicted, in some cases twice as fast. Fed officials now expect to raise their target for the benchmark fed funds rate to 1.75%-2% this year, double what they’d foreseen in December. And by next year, they anticipate raising it to 2.75%-3%—a range we haven’t seen since 2008 and well above the 1.5%-1.75% they had predicted in December. Indeed, a lot has happened since their December meeting, including the Russian invasion of Ukraine, which threatens to make today’s raging inflation even worse. The Fed had been walking a tightrope during the pandemic, wary of hurting the economy with higher interest rates even as the low borrowing costs fueled inflation. Faster rate hikes mean Fed officials “have finally decided to present a more realistic, rather than hopeful, outlook for inflation,” Conrad DeQuadros, an economist at Brean Capital Markets, said in a commentary. “The message from the Fed is that the inflation problem is much worse than policymakers previously thought.” On Wednesday, Federal Reserve Chair Jerome Powell said the economy is strong enough to absorb aggressive rate hikes. “All signs are that this is a strong economy indeed,” he said during a virtual press conference. Have a question, comment, or story to share? You can reach Diccon at firstname.lastname@example.org. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Federal Reserve. “Federal Reserve Issues FOMC Statement.” Moody’s Analytics. “FOMC Monetary Policy.” Federal Reserve. “Open Market Operations.” Federal Reserve. “Summary of Economic Projections.” Page 2.