AFP, Washington :
The US central bank is set to raise the benchmark interest rate this week, looking to get ahead of price increases that, though absent so far, are still expected to materialize.
It would be the third rate hike this year, and is overwhelmingly expected by economists and traders, and hinted at by policymakers, even though official data show inflation remains well below the Federal Reserve’s two percent target.
With the world’s largest economy growing and near full employment- confirmed by a strong November jobs report on Friday-the central bank has long been expecting to see signs of inflation in the pipeline.
And now a Republican plan nearing approval in Congress to slash corporate taxes offers a potential juice to the economy that could prompt the Fed to hike rates faster, economists say.
The Fed’s forecast in September indicated three rate hikes were likely next year, but any increase in anxiety over fiscal policy and its impact on inflation could be reflected in the revised projections from policymakers that will be released at this week’s meeting.
Since the rate-setting Federal Open Market Committee last met six weeks ago, economic data have seen ripples of distortion from the multiple hurricanes of late summer, including rebounds in home construction and industrial output, for example.
And a key measure of consumer inflation posted its first gain in nine months in October-though this was partly driven by the cost of hotels and lodging, which rose as people left home to flee Hurricanes Harvey and Irma.
The US central bank is set to raise the benchmark interest rate this week, looking to get ahead of price increases that, though absent so far, are still expected to materialize.
It would be the third rate hike this year, and is overwhelmingly expected by economists and traders, and hinted at by policymakers, even though official data show inflation remains well below the Federal Reserve’s two percent target.
With the world’s largest economy growing and near full employment- confirmed by a strong November jobs report on Friday-the central bank has long been expecting to see signs of inflation in the pipeline.
And now a Republican plan nearing approval in Congress to slash corporate taxes offers a potential juice to the economy that could prompt the Fed to hike rates faster, economists say.
The Fed’s forecast in September indicated three rate hikes were likely next year, but any increase in anxiety over fiscal policy and its impact on inflation could be reflected in the revised projections from policymakers that will be released at this week’s meeting.
Since the rate-setting Federal Open Market Committee last met six weeks ago, economic data have seen ripples of distortion from the multiple hurricanes of late summer, including rebounds in home construction and industrial output, for example.
And a key measure of consumer inflation posted its first gain in nine months in October-though this was partly driven by the cost of hotels and lodging, which rose as people left home to flee Hurricanes Harvey and Irma.
