It’s Fed Day Today

by Marilou Moursund on June 13, 2018

in Economic Indicators,Fed policy,interest rates

It is widely expected that the Federal Reserve will raise rates by a quarter of a percent today.  From the linked Wall Street Journal article:

It’s possible that continued strong hiring in the U.S., which pushed down the unemployment rate to 3.8% in May, leads at least one official to move up from three to four rate rises, moving the median.

But it’s just as likely that with few signs of accelerating inflation and new threats to growth from abroad (see below), officials stay where they were in March.

International risks have resurfaced recently. For now, these threats—from trade tensions, European political instability and emerging markets—are uncertain and are outweighed by the strong U.S. economic outlook. But they could give Fed officials who are more cautious about raising rates a reason to push back against colleagues who are more eager to do so for fear of domestic overheating.

So far, these risks don’t look as severe as market turmoil in early 2016 that led the Fed to scratch plans for multiple rate increases that year. And the bar to deviate from planned rate rises is higher now because inflation is at the Fed’s 2% target. Look for any clues about where that bar now sits.

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