Currency News: What To Know About The Fed Meeting

Currency News

The Federal Reserve will wrap up its third meeting of the year on Wednesday, where the focus of discussion continues to be when to raise interest rates. Fed chair Janet Yellen has made it clear in the past that rates will not be moved during the current meeting in April, but analysts watching the market believe it could happen during the second half of the year. Once believed to likely happen in June, this has become decreasingly likely, as a slew of poor US economic data from the first quarter point to September or even later for an increase in borrowing costs.

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After the meeting, Yellen will not hold a press conference and central bank officials are not releasing new economic projections. This will make it hard to get a clear signal about what the Fed is thinking as far as the timing of the interest rate hike. The only clues to investors and analysts will be in the Fed’s statement at 2 pm EST. There, it will likely maintain its position that it will not raise interest rates until it sees the signs that the economy is ready.

Borrowing costs have been near zero since 2008, when they were dropped as a part of quantitative easing in response to the Great Recession. Once expected to raise rates in June, the Fed has not seen the progress in the labor market it has wanted. It would also like to see inflation return to 2%, a standard benchmark for a healthy economy. Inflation has been stubbornly low, partially because of the drop in oil prices and the rising US dollar. Once these factors subsist, inflation could start rising, but it might not be in time for the Fed to even raise rates in September. It also depends on whether the poor first quarter economic results were seasonal or something more serious.

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