US Fed To Hike Interest Rates For First Time In 2018

The Federal Reserve is widely expected to announce Wednesday the first of at least three interest rate hikes this year as the central bank works to head off inflation.

Washington, (UrduPoint / Pakistan Point News - 21st Mar, 2018 ) :The Federal Reserve is widely expected to announce Wednesday the first of at least three interest rate hikes this year as the central bank works to head off inflation.

Though US central bankers admitted to being befuddled by the absence of inflation last year despite the economic recovery and strong job market, they now see signs of rising price pressures. Despite a shutdown of federal government offices in Washington due to a snowstorm blanketing the nation's capital, the Fed said on Twitter it would continue its meeting "as planned." Policymakers reconvened at 9:00 am for the second day of the meeting.

So far, the Fed has been moving gradually to tighten monetary policy to prevent the world's largest economy from overheating. But a host of factors -- including the massive tax cuts enacted by Congress, a weaker Dollar and robust job creation -- have markets on the lookout for signs the Fed could become more aggressive, and boost rates four times this year instead of three.

Following the Fed's decision, newly-installed Chairman Jerome Powell will hold his first quarterly press conference and his words will be closely scrutinized for hints about the central bank's thinking and the likely pace of interest rate increases.

Ian Shepherdson of Pantheon Macroeconomics said markets already accepted the coming Fed rate hike, so the comments and the updated quarterly forecasts will be of more interest. "After a widely-anticipated central bank policy move, what really matters is what policymakers say about their actions and intentions," he said in a client note.

But Powell is likely to avoid sending ripples through markets by criticizing the $1.5 trillion tax cuts, even though they are expected to balloon the government deficit and stimulate an economy already at full employment, Shepherdson said.