The Federal Reserve is expected to raise interest rates at its first policy meeting under Chairman Jerome Powell and may signal more hikes are coming in response to tax cuts and government spending that could further stoke a robust U.S. economy, reports Reuters agency.
“The U.S. central bank projected late last year that it would lift rates three times in 2018, but some investors believe the fiscal stimulus and recent hints of inflation pressures will push policymakers to add an additional increase to the mix. The Fed is scheduled to issue its latest policy statement at 2 p.m. EDT (1800 GMT). Powell is due to hold a press conference half an hour later.”
In recent weeks were speculations about stimulus which could drive more Americans into tight labor market. It could also lift central bank´s 2 percent inflation target.
But, according to Reuters, analysts are split whether FED will raise rates until more prices pressures are clearly evident. “Especially given outside risks to the economy such as a possible global trade war.”
“A prudent institution would probably give more weight to the facts, at least for the moment,” Roberto Perli, a former Fed economist told Reuters, who is now a partner at Cornerstone Macro, wrote in a note predicting the Fed would stick with three projected rate increases for this year.
FED stimulating effort is coming to an end. The drive came in the wake of the 2007-2009 financial crisis. According to Reuters, It raised its benchmark overnight lending rate three times last year, to a range of 1.25 to 1.50 percent, as joblessness fell and economic growth accelerated. It is expected to raise rates by another 25 basis points on Wednesday.