Fed expected to keep interest rates steady

WASHINGTON: The Federal Reserve is expected to leave interest rates unchanged on Wednesday while signalling a gradual tightening of monetary policy later this year as the US economy continues to expand and job gains remain solid.

Investors will focus on the US central bank’s gauge of inflation, which remains stubbornly below its 2 per cent target, the risks it sees to its economic outlook, and any assessment of the impact of the Trump administration’s tax overhaul on growth.

The Fed is due to release a statement at the end of its latest two-day policy meeting at 2 pm EST (1900 GMT).The policy meeting is Fed Chair Janet Yellen’s last as head of the central bank.

The economy has added about 10 million jobs and unemployment has fallen to a 17-year low of 4.1 per cent during Yellen’s four-year tenure while interest rates have slowly risen from the near-zero levels put in place to fight the 2007-2009 recession.

Incoming Fed chief Jerome Powell has worked closely with Yellen and embraces her view that keeping rates on a slow upward path will allow unemployment to fall further, coaxing workers back into the labour force and fostering stronger wage growth.

With the outset of the Powell era only days away, analysts do not expect a dramatic shift from the Fed on Wednesday.

“Why change the current message on policy and possibly sway market opinion one way or the other, just before Powell takes over?” said Lou Brien, an analyst for trading firm DRW. — AFP