Date
22 July 2017
The Federal Reserve raised its benchmark interest rate at its last policy meeting in December, the second such move in a decade. It forecast a further three increases this year. Photo: Reuters
The Federal Reserve raised its benchmark interest rate at its last policy meeting in December, the second such move in a decade. It forecast a further three increases this year. Photo: Reuters

Fed likely to keep rates steady

The US Federal Reserve is expected to keep interest rates unchanged in its first policy decision since President Donald Trump took office as the central bank awaits greater clarity on his economic policies, Reuters reports.

Trump has promised a large infrastructure spending program, tax cuts, a rollback of regulations and a renegotiation of trade deals but has offered few details or a timeline for their roll-out since his victory in the Nov. 8 election.

The central bank’s latest policy decision is scheduled to be released on Wednesday at the conclusion of a two-day meeting. Fed Chair Janet Yellen is not due to hold a press conference.

The policy decision will come a week after Yellen underscored that the US economy is near full employment and warned of a “nasty surprise” on inflation if the Fed is too slow with its rate hikes.

Economists polled by Reuters have all but ruled out a rate increase at this week’s meeting. Investors next see an interest rate rise in June, according to Fed futures data compiled by the CME Group.

The Fed raised its benchmark interest rate at its last policy meeting in December, the second such move in a decade, to a target range between 0.50 percent and 0.75 percent. It forecast a further three rate increases this year.

Despite encouraging US economic data, Fed policymakers are currently hampered in assessing how quickly inflation might rise until they have more information on Trump’s economic plans.

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