The Fed's monthly purchases of government-backed bonds to prop up the economy "still have a use, but it’s time for us to begin to taper them."
"Uncertainty remains high" and "central banks may need to take preemptive action," the Fund warns in its latest World Economic Outlook.
"The pandemic continues to cast a shadow, especially as the Delta variant constitutes a growing source of uncertainty."
"June’s big inflation number will ramp up scrutiny of price-related data as policymakers assess whether the economy is at greater risk of overheating."
It is still "appropriate to maintain" near-zero interest rates even though inflation "has increased notably this spring."
"Temporary is going to be a little longer than we expected initially ... Rather than it being two to three months it may be six to nine months."
The Fed also reassured investors it will continue its asset purchase program while the U.S. recovers from the pandemic.
The largest gain in the CPI in nearly 12 years reflects in part the comparison to extremely weak inflation a year ago amid pandemic lockdowns.
Spending on coronavirus relief has "sent the federal debt soaring to levels not seen since the end of World War II as a proportion of the economy."
The central bank expects to maintain ultralow rates until “inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.”
“Banks remained resilient in fourth quarter 2020, consistent with the improving economic outlook,” the FDIC says.
Bank of America's results were helped by an $828 million release from its reserves for expected loan losses.
