Fed to raise interest rates to boost economy, but could be pressured to hike them further
The Federal Reserve will likely hike interest rates for the second time in two months to boost economic growth and inflation, as the Fed faces pressure to raise rates faster to help push inflation up to 2% from below the Fed’s 2% target.
The central bank raised rates for two consecutive sessions last month to try to boost the economy, a move that came after a surge in the price of oil and the prospect of a weaker-than-expected labor market.
The Fed raised rates to 3% in March, the longest hike in the Fed-led monetary policy cycle since the 2008 financial crisis.
The agency’s monthly policy statement is expected to be released on Tuesday, when rates are expected to increase to a range of 1.75% to 2%.
But some Fed officials are skeptical of the effectiveness of raising rates further, and some analysts have been pushing the central bank to keep rates on hold until the labor market improves.
If the Fed raises rates again, it will be at a time when inflation expectations are running low.
Inflation is expected this year to be less than 2%.
That would be the lowest level since the first half of 2009, and it would also be the longest non-recessionary expansion in more than two decades.
The economic impact of raising interest rates will depend on the economy’s performance.
The unemployment rate is expected fall to 4.7% in 2019 from 6.6% now.
Economists are predicting that the Fed will raise interest rate for the first time in more years in 2019.
But economists expect that the economy will continue to expand in the medium term and the Fed could be forced to hike rates sooner than it previously expected.
The labor market is likely to continue to improve in the near term, but it may take longer than expected, said Jeff Lacker, senior economist at the University of Michigan’s College of Business.
“It is not clear that the labor force participation rate will improve significantly,” he said in a note to clients.
“And we are not sure that unemployment rates will improve dramatically.”
The Fed has been running a series of policy meetings to discuss the economy and inflation since the start of the year, and the committee has said that it will not raise rates for another six months.
The committee is also considering increasing interest rates at its next meeting on Feb. 26, which is expected.
Economies around the world are expected on Tuesday to consider what measures they should take to boost growth.
The International Monetary Fund is expected on Monday to announce its economic forecast for the year and is expected discuss how it thinks the Fed can raise interest interest rates more quickly, a process that could take months.
Fed policymakers are also weighing the possibility of reducing their bond purchases to ease inflation pressures.
If that occurs, the central banks would have to buy more than $1 trillion worth of bonds to support their economy.
“We will look at a range, but we will certainly look at it carefully,” Federal Reserve Chair Janet Yellen said in an interview on CBS’ “Face the Nation.”
Yellen has been urging central banks to buy debt to ease monetary pressures and reduce risk.
She said on “Face The Nation” that if the central bankers fail to do so, the economy may suffer.
“There will be a severe, serious, but manageable slowdown in economic growth, and I think that’s going to be very, very difficult for the economy to recover in the short term, and that’s why it’s very important for the central policymakers to be doing something right now to stabilize the economy.”