US Fed Officials See Rate Hike In 2023

The US Federal Reserve on Wednesday recognised rising inflation but again attributed it to "transitory" factors, while a majority of officials on its policy setting committee predicted a rate hike in 2023.

The outlook came as widespread vaccinations allow the world's largest economy to resurge faster than previously expected from the Covid-19 pandemic downturn.

Fed officials also raised their median forecast for inflation this year to 3.4 percent from their previous 2.4 percent in March, and boosted the growth outlook to 7.0 percent from 6.5 percent, according to the quarterly projections.

However, while the economy and job market have strengthened, "risks to the economic outlook remain," the Fed's policy-setting Federal Open Market Committee (FOMC) said in a statement following a two-day policy meeting.

Concerns about rising prices have ignited worries the Fed could allow inflation to spiral, which would then force them to raise rates aggressively and clamp down on economic growth.

The FOMC again tried to ease those worries, stressing they would not move to remove stimulus until progress is made on reducing unemployment and keeping inflation above their two percent goal.

"The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors," the Fed said.

But the committee is prepared to move "if risks emerge that could impede the attainment of the committee's goals."

The Fed also said it will continue buying US$120 billion a month in bonds, thereby providing liquidity to the economy.

Fed Chair Jerome Powell will discuss the decision in a press conference later on Wednesday. (AFP)