Federal Reserve to review monetary policy settings
Today the Federal Reserve’s Federal Open Market Committee will publicly announce whether or not it will raise its benchmark interest rates.
Last year the Federal Reserve projected three interest rate hikes this year, suggesting another raise after the second 2017 increase in June brought rates up to 1.25%.
But while inflation spiked last month, it still remains well under the Fed’s 2% target, dampening the prospects of a rate raise. The persistently low inflation suggests the economy is not at full employment, despite a historically low unemployment rate of 4.4%. As a result, betting markets still put the odds of another 2017 increase under 50%.
Even if the committee declines to announce a rate hate hike today, a 0.25% increase is almost certain to occur by mid-2018. Interest rates have remained at rock bottom since they were lowered to stimulate investment after the 2008 recession, and the Federal Reserve is desperate to wean the economy off of cheap credit. But acting too quickly threatens to hinder America’s sluggish economic growth.
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