By Yasin Ebrahim

Investing.com: The Federal Reserve maintained interest rates at near zero on Wednesday but announced it would increase bond purchases. It also stated that it will accelerate the tapering process and set a timeline for rate increases to reduce inflation.

According to the committee, it will increase its monthly taper by $30 billion per month and double the pace of $15 billion announced in November.

The move to accelerate the pace of bond purchase tapering was largely expected after Fed Chairman Jerome Powell recently flagged concern about inflation and conceded that it was “good time to retire that word [transitory].”

The Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, was up 0.6% in October, pushing the rate for the 12 months through October to 5%, well above the Fed’s 2% target.

Some worry that Fed’s inflation pivot could force the central bank to tighten policies more aggressively as the economy slows down in 2022.

Stifel wrote in a note, “The Fed must act. But after being on the sidelines too long and falling behind it curve, the aggressive actions arguably required to stem the cost backup will likely come with significant consequences for growth.”

Federal Open Market Committee kept its benchmark rate at 0%-0.25%.

This faster tapering pace means the bond purchase program ends in March. It opens the door for rate increases to begin in 2022.

The Fed projects its benchmark rate at 0.9% in 2022. That would mean three more hikes next year.

The Fed’s Powell press conference is expected to draw traders attention at 2.30 pm. ET, for more clues on the Fed’s tapering plans and how the Omicron variant of coronavirus was affecting the economic outlook.