The US Federal Reserve will continue to increase key interest rates to fight high inflation that has plagued the American economy.

Although the Federal Open Market Committee (FOMC) slowed rate hikes at December and January meetings to 50 basis points and 25 basis points, respectively, the FOMC indicated “it anticipates ongoing increases in the target range will be appropriate” to return inflation to 2 percent, said the semiannual Monetary Policy Report to the US Congress.

In its toughest monetary tightening in decades, which included four consecutive rate increases of 75 basis points, the US central bank made a total of 425-point rate hikes on seven occasions last year to fight record-high inflation that climbed to its highest level in over 40 years by mid-2022.

However, Fed’s preferred inflation indicator, the core personal consumption expenditures (PCE) price index, rose 4.7 percent annually in January, up from a 4.6 percent year-on-year gain in December, and coming higher than the market estimate of a 4.3-percent increase. On a monthly basis, the core PCE price index rose 0.6 percent in January, up from a 0.4-percent monthly gain in December, and higher than the market estimate of a 0.4-percent increase.

Fed said in the report it is “acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials.”

Chair Jerome Powell will make his semiannual testimony before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday about the central bank’s monetary policy.

CURRENTPH NEWS SERVICE