In response to the shifting sands at the U.S. Federal Open Market Committee (FOMC), Fitch Ratings is accelerating its rate hike forecast.

In a new report, the rating agency said it now expects two rate hikes from the FOMC this year, and four more in 2023, taking rates to 1.75% by the end of next year.

It had previously called for just one increase this year and two the following year, which would have had rates at 1.0% by the end of 2023.

The shift follows what it called a “major pivot by the Fed” at its policy meeting last month amid rising inflation concerns.

“Most significantly, the Fed described inflation as having exceeded 2% ‘for some time,’ suggesting that recent increases have already compensated for earlier shortfalls under the Fed’s flexible average inflation targeting strategy announced in mid-2020,” Fitch said.

Additionally, the Fed now expects maximum employment to be reached soon and suggested that relentless inflation may pose a threat to the economic recovery, the rating agency noted.

“We believe this year’s rate rises will come at the Fed’s June and September policy meetings,” Fitch said. “The omicron variant may delay the advent of maximum employment ahead of the March meeting.”

Notwithstanding the revised rate forecast, Fitch said it has not altered its forecasts for either U.S. or global GDP.

“We think the private sector is relatively well prepared for higher U.S. borrowing costs, but our updated forecasts reinforce the prospects for higher US Treasury yields and a stronger U.S. dollar against the euro and the Chinese yuan,” it said.