Markets eye Fed interest rate outlook, GDP growth forecast

Business | 13 Jun 2018 4:49 pm

The US Federal Reserve is set Wednesday (US time) to modestly raise its key short-term interest rate for the second time this year. But attention will be focused mainly on any hints that the Fed might accelerate its rate increases in the coming months.

The Fed statement will be issued at 2:00 p.m local time (early Thursday HK time). The Fed also issues the latest economic forecasts and its interest rate outlook.

Federal Reserve chairman Jerome Powell will brief the media at 2:30 p.m, local time.

Some economists think the Fed will signal that it expects to raise rates four times this year, up from its current projection of three increases. Others believe the central bank will stick with its projection of three rate increases, partly out of concern that rising trade tensions triggered by President Donald Trump’s aggressive policies might slow global growth.

The policymakers will reveal their action in a policy statement and in updated economic forecasts, followed by a news conference by Chairman Jerome Powell. Some analysts are speculating that Powell may announce that he will begin holding a news conference after each of the eight policy meetings the Fed holds each year, rather than only once a quarter.

The Fed’s meeting this week will be followed by policy meetings of two other major central banks — the European Central Bank tomorrow and the Bank of Japan on Friday. While Japan’s central bank isn’t expected to make any major policy shifts, anticipation is rising that the ECB may outline as early as this week plans to begin paring its bond-buying stimulus program as a prelude to ending them altogether.

When the Fed last met in May, it left its short-term rate unchanged. But it noted that inflation was edging near its 2 percent target after years of remaining undesirably low. Should inflation eventually pick up, the Fed might move to tighten credit more aggressively.-AP/The Standard

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