3 Things To Watch For From The Federal Reserve On Wednesday

Most economists say they think the Fed wants more time to evaluate the U.S. economy, measure the risks emanating from abroad and assess whether inflation will soon reach the policymakers' 2 percent target rate. [...] most Fed watchers think the next rate increase won't come before December. The answer — or at least the perceived answer — could come from the triple-dose of news the central bank will issue: A policy statement, updated economic forecasts and a news conference by Chair Janet Yellen. If that language is strengthened — perhaps by noting, in Fed parlance, that the risks to the Fed's economic outlook appear "balanced" — that would be read as a signal that a rate hike could be coming soon. Based on history, the Fed wants to prepare investors for a forthcoming rate increase and avoid having a small rate hike trigger a stock market plunge. Inflation has remained stubbornly below that level for four years — a key factor in the Fed's reluctance to resume raising interest rates. The Fed has said repeatedly that it expects inflation to rise to 2 percent within a couple of years as the effects of falling oil prices and a stronger dollar fade. Back in December, when it raised its benchmark rate for the first time in seven years, Fed officials had indicated the likelihood of four additional modest increases in 2016.

Topics:  u.s    chair janet   yellen   based   inflation   the fed   fed   december   watch   rate   years   answer   increase   percent   time   economic   hike   risks   news   
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