Elections or not, US Fed likely to stand pat on rates

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AFP, Washington :
When the US Federal Reserve issues its next interest rate decision Wednesday, the dawn of a bitterly fought presidential election day will be only 136 hours away.
Trailing in opinion polls, Republican nominee Donald Trump has lambasted the central bank and accused it of artificially suppressing rates to help President Barack Obama-a charge Fed Chair Janet Yellen has emphatically denied.
Most observers expect the Fed’s Federal Open Market Committee, which sets interest rate policy, to stand pat, seeing no pressing need to act, especially right before an election.
While Fed members are divided on the dangers of inflation, the majority are expected to vote to leave rates at their historically low target range of 0.25-0.5 percent for one more month. “There would be no reason to potentially create noise around an election,” said David Stockton, a former Fed research director now at the Peterson Institute for International Economics.
By law, the Fed is insulated from political pressures and its budget is not set by Congress. And analysts agree there is no sign electoral politics are directly influencing the Fed’s thinking.
The two-day FOMC meeting more likely will be focused on setting market and investor expectations for the final rate meeting of the year in December, Stockton told AFP.
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