WASHINGTON – The US Federal Reserve was poised to announce a fresh quarter percentage-point hike to its benchmark lending rate on Wednesday to tackle inflation, while keeping the option open for more such moves in the coming months. The Fed last month halted its aggressive campaign of monetary tightening after 10 consecutive rate increases to give policymakers more time to assess the health of the world’s largest economy.
At the June meeting, members of the rate-setting Federal Open Market Committee (FOMC) nevertheless indicated they see possibly two additional interest rate hikes this year.
“The forecast is for the Federal Open Market Committee to hike the target range for the fed funds rate by 25bps but maintain a bias toward additional rate hikes, if needed,” Oxford Economics’ chief US economist Ryan Sweet wrote in a note to clients.
A rate hike on Wednesday, the 11th since the US central bank launched its cycle of monetary tightening in March last year, would raise the Fed’s benchmark lending rate to a range between 5.25 and 5.5%– its highest level in 22 years.
Futures traders see a probability of close to 99 percent that the Fed will proceed with a quarter percentage-point hike, according to data from CME Group. Since the June decision to pause rate hikes, inflation has continued to fall, although it remains above the Fed’s long-term target of two percent.
Meanwhile, unemployment has remained close to historic lows, while economic growth for the first quarter has been revised up sharply on resilient consumer spending data. – Nampa/AFP