Is the Federal Reserve likely to raise interest rates this week?
Summary
Most economists and investors expect the Federal Reserve to keep its benchmark interest rate at 3.75% to 4% at its Wednesday meeting, despite rising inflation. Traders expect another rate increase in December, while some Fed officials say they can wait for more information before tightening policy again.Key Facts
- The Fed is scheduled to announce its rate decision at 2 p.m. Eastern on Wednesday.
- U.S. consumer prices rose 3.7% over the year through September, while core inflation rose 2.6%.
- The Fed’s annual inflation target is 2%.
- Gasoline prices above $4 a gallon accounted for more than half of September’s increase in consumer prices, according to the Labor Department.
- In September, the Fed raised its benchmark rate by a quarter of a percentage point, its first increase in three years.
- CME Group’s FedWatch tool showed an 88% probability of no rate change in October and a 71% probability of a December increase.
- The Fed’s quarterly projections signaled another rate increase later in the year.
- New York Fed President John Williams said officials had time to gather more information after the September rate increase.
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