Economy

What to expect from the last Fed meeting in 2018?

What to expect from the last Fed meeting in 2018?

President Donald Trump slammed the Federal Reserve on the eve of a pivotal policy meeting for "even considering" another interest-rate increase, and suggested the central bank has no reason to move because inflation is low and the USA currency is strong.

Trump has repeatedly broken with the norm respected by U.S. presidents in recent decades to refrain from criticizing the Fed, hammering the central bank this year over its move away from the zero interest rate policy implemented during the global financial crisis.

In a tweet on Tuesday, Trump said that the Federal Reserve should "take the Victory" of a strong USA dollar while "the outside world is blowing up around us", instead of raising interest rates.

Fed officials have also noted they are paying attention to risks such as slowing growth in Europe and in interest-sensitive sectors of the USA economy.

Markets have slumped on growing concerns about slowing USA and global economic growth amid rising interest rates and trade tensions between the US and China.

The Fed, which has been raising interest rates in 25-basis-point increments since December 2015, has promised to raise rates gradually toward a neutral setting to keep the economy from overheating.

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But some Wall Street economists and analysts said that they did not see a major shift in Fed's tightening monetary policy. In a highly unusual move for a president, Trump has publicly called the Fed and its string of rate hikes this year "my biggest threat".

Ever since its June meeting, the Fed telegraphed a fourth rate hike for 2018 was likely (the other three occurring in March, June and September of 2018). Some economic indicators-including US economic growth and employment-are healthy and tilt the scales towards a rate increase.

"Our gradual pace of raising interest rates has been an exercise in balancing risks".

"I just don't think of it", said Mary Daly, president of the San Francisco Fed, in an appearance last week on PBS NewsHour. Investors will be looking for signs that the central bank realizes that the economy isn't going to grow as fast as it had thought, but that it's not going to slow too much-and that it realizes it is coming close to tightening the economy into a recession. "The great thing about the Fed is we have been given independence".

The president pointed to the Wall Street Journal editorial page which urged the Federal Reserve to "pause its double-barreled blitz of higher interest rates".

Powell, who was Trump's choice to lead the Fed, has endure increasing public attacks from the president.