By Howard Schneider

WASHINGTON, (Reuters) – The Federal Reserve may raise interest rates in March. It is currently in a “good situation” to continue aggressively fighting inflation after a policy change last month, St. Louis Fed President James Bullard stated on Thursday.

In December, the U.S. central banking agreed to stop asset purchases in March. This laid the foundation for rate rises that every policymaker, including the most cautious, believes will be necessary in 2022.

Bullard made prepared remarks before the CFA Society of St. Louis that stated the Fed was “in good shape to take additional steps to control inflation”, including passive balance sheet runoff and increasing the policy interest rate. He also suggested that they could adjust the pace and timing of future policy rate rises.

A rate hike could be authorized “as soon as March’s meeting… Bullard stated that subsequent rate increases could either be pushed back or pulled ahead depending on the inflation trends.

Projections issued in December showed half of the Fed policymakers expect three quarter-percentage-point rate increases will be needed this year.

Bullard explained that inflation has reached more than twice Fed’s 2% target. The central bank must now be capable of meeting its inflation targeting targets over the next several years because of the “shock” to the economy.

As the Omicron strain of coronavirus began to rise in daily infection rates, the December policy shift was made.

Bullard stated that he didn’t believe the Fed or U.S. economies would be thrown off-course by the current case wave.

Bullard stated that infections in the United States are expected to “follow the pattern where it was first identified”, in South Africa. He cited projections that the daily cases may reach their peak in late November.