Business · Economy · 1 hr ago
Fed expected to keep rates steady before US midterm elections
The Federal Reserve is expected to keep interest rates steady at its meeting next week, just days before the US midterm elections on November 3.
Its policy committee last raised the key rate in September, setting a target range of 3.75% to 4.0%.
Inflation remains above the Fed’s 2% target, and rising energy costs have added pressure on prices.
Analysts say the Fed may wait until its meeting in early December before raising rates again.
They say the election should not guide the decision, which is meant to be based on economic conditions.
The timing could keep the Fed out of election politics, while a December increase would have little difference in economic effect, one analyst said.
Markets are pricing in at least one rate hike before the end of the year.
The Federal Reserve is expected to keep interest rates steady at its meeting next week, analysts say.
The meeting will take place days before the November 3 U.S. midterm elections.
The Fed raised its key rate in September for the first time in three years, to a target range of 3.75% to 4.0%.
Inflation remains above the Fed’s 2% target, while markets are pricing in at least one rate increase before year-end.
Former Cleveland Fed head Loretta Mester said the economic data support further rate increases, but expects policymakers may wait until December.
- Who
- The Federal Open Market Committee, the Federal Reserve’s policy-setting body.
- What
- It is expected to keep interest rates steady, though markets are pricing in at least one rate hike before year-end.
- When
- The committee meets over two days next week and is scheduled to announce its decision Wednesday at 2:00 p.m. local time (18:00 GMT).
- Where
- Not stated
- Why
- Analysts say policymakers may avoid moving too quickly ahead of the election. Inflation remains above the Fed’s target.
Donald Trump
Loretta Mester
Interest rates
Donald Trump
Trump has demanded lower rates to spur economic activity.
Loretta Mester
Mester said the economic data suggest rates should continue to rise.
The FOMC raised its key federal funds rate for the first time in three years, setting a target range of 3.75% to 4.0%.
The United States and Israel attacked Iran, after which global energy prices rose and Tehran curtailed oil and gas supplies through the Gulf.
The PCE price index reached a three-year high of 3.9%.
The FOMC is due to meet over two days and announce its decision Wednesday.
U.S. midterm elections are scheduled.
Mester said policymakers may wait until the next meeting to tighten policy.
- Expected decision
- Rates held steady
- Current target range
- 3.75% to 4.0%
- Inflation target
- 2%
- PCE inflation peak
- 7.2% in 2022
- PCE inflation
- 3.9% in May
- Election date
- November 3
What people are saying
The Fed doesn’t take into account any kind of political issues in that FOMC room
It really is based on the economics.
It’s unhelpful for everyone if the Fed gets wrapped up in all the political discourse right before an election