BENGALURU, Jan 20 (Reuters) - The U.S. Federal Reserve will tighten monetary policy at a much faster pace than thought a month ago to tame persistently high inflation, now viewed by economists polled by Reuters as the biggest threat to the U.S. economy over the coming year. Encouraged by apparent lower severity of the Omicron variant, governments and central banks around the world are attempting to push their economies back into some version of normality. Fed Chair Jerome Powell said recently he sees an economy that "functions right through these waves of COVID-19." Eager instead to control raging inflation, which hit a near 40-year high in December, and further tightening in the labor market, several Fed officials recently signaled interest rate rises are coming very soon. Median forecasts from the Jan. 12-19 Reuters poll showed the Fed raising its key interest rate three times this year, starting in March, to 0.75-1.00% by end-2022, a significant upgrade from two hikes predicted in the December survey. A strong minority, 40 of 86 analysts, expected the central bank to hike at least four times this year, in line with current market pricing. Nearly three-quarters of respondents, 37 of 51, predicted the Fed to start reducing the size of its nearly $9 trillion balance sheet by the end of the third quarter. Eleven respondents said it would begin in the second quarter, 26 said in the third and the remaining 14 said later. "It"s almost as if, all at once, the Fed has realized that policy has been left too accommodative, for too long," wrote Robert Kavcic, senior economist at BMO Capital Markets in a note to clients. "To their credit, if they"ve realized a mistake, they"re going to fix it - and fix it fast." Three more interest rate hikes are forecast in the first three quarters of 2023, the poll found. With rates still on the floor at 0.0-0.25%, inflation has already risen significantly, a common problem most central banks across the world are struggling to contain. The core personal consumption expenditure (PCE) price index, the Fed"s key inflation gauge, hit 4.7% in November, its highest since 1989, and is forecast to average 4.9% this quarter. It is forecast to drift downward from there, but remain above the central bank"s 2.0% target for at least the next three years. Consumer price index (CPI) inflation, at 7.0%, is already at its highest in 40 years, underscoring how much of a focus price rises have become after decades of historically low inflation. Two-thirds of respondents, 25 of 38, said persistently higher inflation posed the biggest risk to the U.S. economy over the next 12 months. Six said swifter-than-expected monetary tightening and five said new coronavirus variants were the biggest threat. The other two said supply chain disruptions. "With its newfound belief inflation is the main threat, the Fed is likely to take it too far and hike the yield curve into inversion. Then it will be only a matter of time before we get another recession," said Philip Marey, senior U.S. strategist at Rabobank. When asked about the terminal fed funds rate in the coming tightening cycle, the median of 35 forecasts showed 2.25-2.50%, the same as in the previous hiking cycle. Nearly two-thirds of those contributors said that would be reached at some point in 2024. Surging Omicron variant cases in the United States, which have led to some disruptions, appear to have already taken a toll on the economy over the past weeks. But economists don"t expect that to last. The economy likely grew at a seasonally adjusted annualized rate of 5.9% last quarter, slowing to 2.9% in the current one, a downgrade from 6.0% and 4.0% predicted just a month ago. Over 80% of respondents, 31 of 38, said the Omicron variant would have a milder impact on the U.S. economy compared to Delta, including five who said much milder. The economy was expected to rebound next quarter and expand 3.8% but then begin to slow in the following quarters. U.S. GDP was predicted to average 3.8% and 2.5% growth this year and next, respectively, compared with 5.6% in 2021. (For other stories from the Reuters global economic poll read more )