US Fed due to meet, no rate hike expected

21 March, 2019 12:00 AM printer

WASHINGTON: The US Federal Reserve is due Tuesday to hold its second policy meeting of the year but has signaled it will not raise interest rates as the global economy slows.

Members of the interest rate-setting Federal Open Market Committee have said repeatedly since December they will be “patient” before deciding on the next hike in benchmark lending rates, reports AFP.

Following the two-day meeting, Fed Chairman Jerome Powell is due to announce the decision on Wednesday. The federal funds rate — which helps set lending rates throughout the economy — is now in a range of 2.25 to 2.5 percent.

With inflation still tame as US economic growth decelerates in 2019, economists also say Fed policymakers are likely once again to lower the number of rate hikes they expect this year from the two projected in December.

“They still believe in the medium term the economy looks to be in good shape,” Kathy Bostjancic of Oxford Economics told AFP.

She said she expected the Fed to cut the median forecast for rate hikes in 2019 from two to one.

“It’s a close call. We’re seeing at most there would be one rate hike and then that would be it for the cycle.”

Growth in the first quarter of 2019 is widely expected to slow. Oxford Economics forecasts growth of just 0.7 percent, which would be the slowest pace in more than three years.

Job growth ground to a halt in February but has maintained a good pace on average and the housing sector shows signs of recovery.

Meanwhile, manufacturing and consumer spending have fallen off sharply. A major question mark remains the extent of the slowdowns in China and Europe.