The Federal Reserve declared a more aggressive position on Wednesday in order to stem the wave of price hikes that have harmed demand for automobiles, housing, food, and other items in the United States and become a political problem for President Joe Biden.

The Federal Open Market Committee (FOMC) said that it will accelerate the phase-out of its stimulus measures to end them in March, allowing it to use its most potent weapon against inflation, hiking lending rates, as early as May.

Also Read| Mark Meadows ‘worthy’ of being held in contempt, says Joe Biden

While conceding the danger of further price hikes, Fed Chair Jerome Powell maintained a consistently bullish view of the US economy, saying it was positioned to continue its robust recovery and was ready to be weaned off the central bank’s easy-money policies.

“Economic activity is on track to expand at a robust pace this year, reflecting progress on vaccinations and the reopening of the economy. Aggregate demand remains very strong,” Powell told reporters following the two-day FOMC meeting.

Also Read| Joe Biden’s nominee for next India envoy addresses lawmakers

Powell recently stated that he and his colleagues underestimated how far prices would rebound in the aftermath of the pandemic, and vowed to fight back. However, on Wednesday, he emphasized that any moves taken will be contingent on the economy’s performance, which is still threatened by the Covid-19 outbreak.

“We need to see how the inflation data and all the data evolve in coming months, but we are prepared to use our tools to make sure that higher inflation doesn’t get entrenched,” Powell said.

The committee took the first step toward tapering its bond purchases in early November, cutting the total by $15 billion each month, which would have brought the program to an end around June.

Also Read| Wall Street bumps up following Biden’s support for Jerome Powell as Fed chief

It will now cut by $30 billion each month, bringing the program to an end two months sooner and allowing the Fed to increase the benchmark interest rate off zero, where it has been since the pandemic began in March 2020.

Powell said “the economy no longer needs increasing amounts of policy support” and painted a picture of a strong economy “in which it’s appropriate for interest rate hikes.”

Also Read| Vijay Diwas 2021: PM Modi, Rajnath Singh recall ‘great sacrifice’ of Indian soldiers

The Fed stated that interest rates would remain low until labor market conditions improve further, but predictions published accompanying the FOMC statement indicated that central bankers expect up to three rate hikes next year.

The US stock market reacted positively to the news, closing the day with solid gains while the Indian equity benchmarks opened in the green on Thursday.