Fed likely to pause, raise growth forecast

After 11 interest rate hikes since March last year, inflation has fallen sharply but remains stuck stubbornly above the Fed’s long-run target of two percent per year – keeping pressure on officials to consider further policy action.

The Fed’s rate decision will be followed half an hour later by a press conference with Fed chair Jerome Powell, which will be closely watched for hints on the path of future rate decisions. Traders currently see it as 99 percent likely that the Fed will hold off on hiking interest rates on Wednesday, and a roughly 70 percent chance it will vote to do the same at the next FOMC meeting in November, according to data from CME Group.

But Goolsbee added that the Fed must remain “attentive to the data,” echoing Powell, who has promised to follow a “data-dependent” path going forward. Analysts will be closely analyzing these forecasts for signs of whether policymakers continue signaling they expect interest rates to rise higher than current levels – as they did in June – and for how long they think rates should remain high to bring inflation firmly back down to target.

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