The Federal Reserve is expected to raise interest rates by a quarter point Wednesday and also signal it will not be raising rates as much as it had previously forecast.
The Federal Reserve is expected to raise interest rates by a quarter point Wednesday and also signal it will not be raising rates as much as it had previously forecast.
Strategists say that may soothe volatile financial markets, but the Fed has a tough task in terms of explaining its actions in a way that will not sound too alarmist about the economy or too unconcerned about deteriorating financial conditions.
The Fed will be taking the fed funds rate range to 2.25 to 2.50 percent, and Fed watchers expect it to remove language in its post-meeting statement that says it will continue with ‘gradual’ rate increases. According to its forecast, the Fed was expected to raise interest rates three more times next year, but economists now expect that will change to show two more hikes next year, with another possible in 2020.
«The economy is decelerating. They were too optimistic on their outlook, but by the same token, they’re going to have to walk a fine line that they’re not overly concerned. They’re just going to take it down a notch,» said George Goncalves, head of fixed income strategy at Nomura.
The Fed’s rate hike is coming against a backdrop of financial market turbulence. Markets have been reacting to concerns about rising interest rates as well as concerns trade wars and weaker global data could lead to a recession.
