Fed foresees a potential rate hike as soon as next year

US Federal Reserve building in Washington, D.C., File Photo

By CHRISTOPHER RUGABER AP Economics Writer

WASHINGTON (AP) — The Federal Reserve signaled it may start raising its benchmark interest rate sometime next year, earlier than it envisioned three months ago and a sign that it's concerned that high inflation pressures may persist.

The Fed also said it will likely begin slowing the pace of its monthly bond purchases later this year if the economy keeps improving.

The bond purchases have been intended to lower longer-term loan rates to encourage borrowing and spending.

The Fed's plans reflect its belief that the economy has recovered sufficiently from the pandemic recession for it to soon begin dialing back the extraordinary support it provided after the coronavirus paralyzed the economy 18 months ago.

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