Washington: US inflation has probably reached its fastest level in four decades, which explains a shift in the Federal Reserve’s approach to monetary policy as well as greater consumer concern about the economy.

The widely followed consumer price index on Wednesday is expected to rise 7 percent for the year through December and 0.4 percent from the previous month. The next day, another report from the Ministry of Labor is expected to show prices paid to producers jumped nearly 10% in 2021. Retail sales and industrial production reports for December arrive on Friday.

The surge in inflation shows why US officials are bracing for faster-than-expected monetary policy normalization. Added to this is evidence of a tight labor market, including rising wages and falling unemployment in Friday’s data.

Fed watchers may have more specifics in the coming week as to whether the interest rate take-off could take place as early as March and when the central bank begins to reduce its balance sheet by $ 8.8 trillion. .

President Jerome Powell testified Tuesday before the Senate Banking Committee on his appointment for a second four-year term. Two days later, Fed Governor Lael Brainard appears before the same panel in a hearing to confirm his elevation to vice president. Other Fed officials who will speak include Loretta Mester, Esther George, Charles Evans and James Bullard.

“With the unemployment rate falling below the Federal Open Market Committee (FOMC) participant’s median estimate of the long-term neutral rate and rapid wage growth, this jobs report will likely alleviate lingering doubts about the part of the more conciliatory members of the FOMC. Said Anna Wong and Andrew Husby of Bloomberg Economics.

Elsewhere, inflation data could show Chinese price pressures easing, Germany will give an indication of its growth in the last quarter of 2021, and South Korea and Romania are expected to continue to tighten monetary policies.