The U.S. Federal Reserve will not be increasing interest rates this week, however it is expected to convey that if domestic inflation and jobs numbers proceed to improve, then international economic frailty will not halt the central bank from raising rates in the near future.
This notion is in stark contrast to the last time the U.S. central bank convened, as officials indicated that wariness regarding the effects of sluggish growth in China and Europe would sway them to keep rates steady until they could have a clearer view of the future.
Looking further back to the meeting before last, the Federal Reserve decided to increase interest rates for the first time in almost ten years, and it also became poised to continue increasing the rates up to four more times throughout the year.
New predictions this week from the Federal Reserve’s 17 officials released after the assembly will nearly definitely indicate a withdrawal from the previously listed 4 increase pace. Economists’ predictions and Federal Reserve policymakers’ suggestions signal that the central bank will likely decrease their target for rate increases from 4 to 2-3 for the year.
However the predicted reduction possibly is indicative of the market’s reaction to the oil and share declination in the month of January, as the Fed decided to keep rates steady at that point. In contrast, a different viewpoint is that increasing anxiety over the global market is leading to the Fed not increasing rates, which could potentially lead to a more bearish market in the near future.
Since their last meeting, the Federal Reserve has seen some very promising data regarding employment and inflation. The Dallas Fed published a statistic that displayed that inflation has steadied at a level of 1.9%, which is close to reaching the central bank’s target level of 2%. In addition, unemployment in the United States stayed at 4.9% in February, which is very close to what many policymakers in the Federal Reserve consider to be full employment.