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Fed Raise Rates in December 2018 Reduces Hikes Next Year


December, 19 2018
watermark Economic news

The US Federal Reserve is anticipated to increase the interest rates on Wednesday but will reduce its rate hike forecast next year. At the same time, this signals the halting of the monetary policy ahead of time, amid the volatility in the financial market and rising concerns of a recession.

The central bank is scheduled to announce their decision on interest rates at 14.00 EST (19.00 GMT) after the last two-day policy meeting in 2018. An hour later, Fed chairman Jerome Powell is anticipated to give its speech on a press conference.

Investors expect for higher interest rates by a quarter of a percentage point, ranging between 2.25 percent and 2.50 percent, which would be the fourth rate hike this year and the ninth since tightening of policies since December 2015.

The monetary tightening of Fed is believed to push the US economy higher that has been moving sluggishly at an unsustainable rate. Yet, this would spike a concern on the White House recalling that the US president Donald Trump has been attacking the US central bank for the not performing well to boost the economy. On Tuesday, a warning was heard from President Trump saying to avoid “another mistake.”

Fed policymakers seem to be changing the previous forecast of three more rate hikes this year considering various factors such as the decline of oil, as well as the economic growth of both Europe and China. Moreover, there is the $1.5 trillion tax cut program from Trump administration, which is anticipated to contract.

Given the fresh economic forecast and the policy statement soon to be released may suggest two rate hikes according to economists. Traders even think that the Fed may not even be able to execute one hike at the very the least.

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