NEW YORK – Interest rates will remain steady as the Federal Reserve is likely to hold it at the meeting in the following days. It needs to analyze more economic information but is expected to hike rates in the month of June.
The policy decision of central bank will be announced on Wednesday 2 p.m. after the meeting. Janet Yellen, the Federal Chair, will not be holding a press conference.
According to most policy makers, in comparison with the past few years, the Federal Reserve is more poised about its projections that the interest rate will increase by two this year.
According to Michael Gapen, an economist at Barclays New York, the bar is higher now to disrupt the Federal Reserve plans as compared to past years.
This is the first tightening cycle of the Federal Reserve in the last 10 years. A rise of four percentage points in the month of December last year was later followed by another increase in March after the two meetings.
According to economists in the survey conducted by Reuters, there’s a small chance that a move will happen after the meeting this week. The next increase will be in June based on the futures data of the Federal Reserve which were gathered by the CME group.
The committee for rate-setting is still waiting for the progress in the policies from Trump administration if the plans for taxation, regulation, and spending will be granted in the legislative department.
When the economic data was diversified after the previous meeting, the economy has increased at a slow 0.7 percent yearly pace in the past few months, and the spending of the consumer was almost stagnant.
On the bright side, the recent occurrences in business investments and growth in wage are expected to make the activity return to its original pace in the following months.
The number of jobs is also slowing since March, but the rate of unemployment had been the lowest for the past ten years with a 4.5 percentage.
Most economists are speculating that the reason behind the weak first-quarter projections is due to the issues such as the rate of growth in the months of January until March and the low employment rate because of the weather.
Sam Bullard, a senior economist at Wells Fargo Securities, expects nothing much in the policy statement. He thinks that the Fed will just focus more on the labor market and not so much on the first-quarter data.
There will be two more reports on employment growth to analyze before the next meeting is conducted.
The 4.5 trillion dollar balance sheet is also expected to be announced this year according to the policymakers based on the March meeting.
They are not expecting to have an announcement this week, but there might be some clues in the statements that shows the issue is on the top priority list of the Fed.
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