WASHINGTON: The Federal Reserve will conclude its latest policy meeting on Wednesday with interest rates almost certainly to remain on hold but officials likely to discuss possible changes to how they manage the US central bank’s key overnight borrowing rate.
Since the Fed cut rates in October, its third and final reduction in borrowing costs in 2019, policymakers have agreed to keep their target policy rate in the current range of 1.50 per cent and 1.75 per cent until there is some significant change in the economic outlook.
US data since the Fed’s last policy meeting in December have done little to shift expectations for continued economic growth this year of around 2 per cent and steady, low unemployment.
Some risks may have risen — with China’s economic growth now in the spotlight after a coronavirus outbreak — and US Treasury bond yields have fallen as a result.
US President Donald Trump on Tuesday also repeated his call for even lower rates. The Republican president lambasted the Fed and its chief, Jerome Powell, in 2018 and 2019 for maintaining a monetary policy that he regarded as too tight.
While investors have increased bets the Fed would cut rates again at some point this year, analysts still were near unanimous that any such decision is months down the road.
Ninety-five of 108 economists polled by Reuters recently said they expected the Fed to leave rates on hold at this week’s meeting, and JP Morgan analyst Michael Feroli said it would likely be “one of the least eventful meetings in recent years.”
The current solid consensus over rates, however, doesn’t mean the agenda is empty.
The Fed is expected to soon decide how much longer it will continue its current practice of buying $60 billion a month in US Treasury bonds, how to scale that programme back, and what will replace it as a long-term fix for its management of short-term bank funding markets. — Reuters
Oman Observer is now on the WhatsApp channel. Click here
