What To Expect From The Federal Reserve’s Interest Rate Decision Next Week | Global News Avenue

It is generally expected that the Fed will maintain a key interest rate on Wednesday because officials are waiting for more data that shows that inflation is cooling.

According to the FedWatch tools of the Zhishang Institute Group, the financial market is almost certain that when the Fed’s Policy Committee holds a meeting on Wednesday, the Fed will maintain the federal fund interest rates in the range of 4.25% to 4.50%. The tool predicts changes in data prediction rates of federal fund futures transactions.

This will be the first meeting of the Federal Reserve since September.

Why does the Federal Reserve keep the interest rate unchanged?

In the fight against inflation, the central bank is entering the suspension model.

Until September, the Federal Reserve has maintained key interest rates at a high level in 20 years, pushing up the lending cost of various loans. The governor of the central bank tries to prevent borrowing and expenditure, re -balance supply and demand, and inhibit the outbreak of high inflation after the epidemic.

Fed officials began to cut interest rates this fall because inflation seems to be steadily declining towards the Fed’s 2% annual interest rate. Not only that, the labor market also shows signs of weakness. This has prompted the Federal Reserve to reduce interest rates to stimulate the economy and avoid a significant increase in unemployment rates.

The task of the Federal Reserve is to take a balanced action, using monetary policy to maintain the economy enough, so that everyone has a job, but it will not be hot to lead to soaring inflation. In the end, the Fed’s goal is to reduce interest rates to the “neutral” level, that is, the cost of borrowing will neither suppress the economy nor artificially boost the economy.

Since autumn, inflation Stubbornly stay Higher than 2%, the labor market ElasticEmployers resist the large -scale layoffs that cause Federal Reserve officials to alert. Both trends have reduced the willingness to cut interest rates from the Fed. Fed officials emphasized in the recent public comments that they will Be patient When inflation shows more signs of progress, interest rates are reduced.

What is the relationship between Trump and the Federal Reserve?

Not only that, Federal Reserve officials are also worried that the newly appointed President Donald Trump’s economic tax reduction and tariff policy may cause inflation. This will force the central bank’s governor to maintain higher interest rates for a longer period of time.

“As the economy is stable, the labor market is stable, and inflation is still a bit sticky. We expect that the Fed will maintain a stable interest rate next week and maintain the” progressive/cautious “method to achieve a neutral interest rate, unless the labor market will be seriously weak.” Deutsche Bank Write in the comments. “The uncertainty of the upcoming policy changes that the Trump administration will introduce has increased cautious reasons.”