WASHINGTON - The Federal Reserve opened its two-day policy meeting on Tuesday, focused squarely on how to address the troubling US inflation threat.

Fed Chair Jerome Powell has signaled that the central bank will pull back on its pandemic stimulus measures more quickly, which would put it in position to raise interest rates and try to quash the wave of rising prices that have hit American households.

In addition to the political damage inflation has done to President Joe Biden, investors are getting nervous about rising interest rates and a resurgence of Covid-19 cases due to the new Omicron variant.

The concerns sent Wall Street stocks lower for a second straight session on Tuesday, ahead of the conclusion of the Federal Open Market Committee's (FOMC) meeting Wednesday, when policymakers are expected to announce the Fed will further slow its monthly bond purchases.

That will put it on a pace to end the program in March, about three months earlier than initially planned, and leave the central bank poised to act directly against inflation by hiking the benchmark borrowing rate as early as May.

Powell for months has argued that most of the price increases were due to temporary pandemic-linked factors that would dissipate, but in late November he acknowledged that inflation could be "persistent."

Annual consumer price inflation hit a nearly 40-year high of 6.8 percent in November, with data showing the increases continuing to spread beyond autos and energy to food and housing.

AFP