If inflation is anticipated, what action is the Federal Reserve most likely to take regarding interest rates?

When inflation is anticipated, the Federal Reserve is most likely to increase interest rates. This action is aimed at controlling inflation by making borrowing more expensive. Higher interest rates can discourage consumer spending and business investments, which can help slow down economic growth and mitigate inflationary pressures.

By increasing rates, the Federal Reserve seeks to reduce the money supply in the economy, which can help stabilize prices as it reduces demand. This is a common monetary policy tool used when there is a concern that inflation might rise above desired levels. The goal of this strategy is to prevent an overheating economy where prices rise too quickly, ensuring sustainable economic growth.