The Federal Reserve interest rate is expected to be maintained at the current level at today’s meeting. Economists favor the expected increase to be in June. The Fed’s decision will be released Wednesday afternoon, at the end of its scheduled 2-day meeting. It will probably make two more interest rate hikes this year, with June far more likely than May to be the next.
A Reuters poll of economists has indicated that they feel it highly unlikely that May will see an increase after the last hike in March. The economy has been growing a low 0.7% since the March meeting, largely due to a slowdown in consumer spending. Analysts believe that the Fed may be waiting to see to what extent President Trump’s policies on spending, regulation and tax will get through Congress.
The likelihood of a rise at the meeting has been boosted by certain economic indicators. Non-farm jobs have been growing, though not at as fast a rate in March as expected. Many have ascribed this to weather conditions. Overall, the unemployment rate dropped to 4.5% – the lowest for 10 years. Wages have increased at the fastest rate this decade. All good indicators for a Fed rate hike.
Not only that, but inflation has been inching towards the 2% target the Fed regards as a reason for an increase. This was indicated by the personal consumption expenditures index used by the Fed as inflation measurement. The January figure for this was 1.9% with consumer prices increasing by 2.5%.
Business investment has also increased, so the indicators for a Federal Reserve interest rate hike are there, with next month the favored time. Janet Yellen, chair of the U.S. Federal Reserve System, is reported to have stated that an interest rate increase would be “appropriate soon”.
Pvt. Ltd.
