According to a recent Reuters poll, the Fed is likely to announce its first rate hike since the COVID-19 pandemic by as soon as H2 2022, faster than the original plans for doing so in 2023. A rising number of economists feel that the US central bank should intervene soon to combat soaring inflation, which touched a 30-year high in October, and threatens to derail the progress made by the US economy in recovering from the coronavirus crisis.

According to the latest edition of the poll, a majority of economists expect the Fed to announce its first rate hike of 0.25% in Q4 2022. In addition, there could be two more rate hikes in the consecutive quarters, bringing up interest rates in the US to 1.25-1.50% by the end of 2023.

Some analysts foresee a rate hike by as soon as summer 2022 as well, powered by a continued increase in inflation as well as wage growth. In case inflationary pressures persist for an extended period of time and hamper consumer consumption, the Fed will have no option but to reign in the monetary policy to counter them.

Almost two-thirds of economists polled want the Fed to implement its first rate hike before September 2022. Several economists and central bank policymakers are now coming around to admit that disruptions to global supply chains could keep prices high in the coming months as well. This goes against their previous expectations for inflation to cool down once the pent-up consumer demand eases.

The Fed is expected to be the first major central bank to start tightening its monetary policy. Its leading peer, the ECB, has already maintained that it plans to keep its monetary policy loose for longer and with the COVID-19 situation in Europe worsening, monetary easing could extend for even longer in the EU region.