http://www.cnbc.com/id/102374975
The Federal Reserve is expected to signal it remains on track to begin raising interest rates later this year, as the central bank shows confidence that low inflation and rising risks from abroad have yet to derail the U.S. economic recovery.
The Fed's first two-day policy meeting of the year concludes on Wednesday, and policymakers will likely restate their "patient" approach to raising rates, while also voicing faith that the economy will continue improving.
Fed Chair Janet Yellen faces growing skepticism that the central bank can tighten monetary policy by mid-year, with a strengthening dollar and falling oil prices adding to worries that inflation readings remain too low for the Fed to begin hiking.
But U.S. central bank officials have argued that the drop in oil prices is a transitory factor that benefits U.S. consumers in the short run.
And with unemployment dropping and growth on track, Fed officials have indicated they will move forward with an initial rate hike in the middle or latter half of the year even if other closely watched measures such as wages remain weak.
2 comments:
In the case of the Fed it is important to analyze consumer confidence. If the Fed chooses to raise interest rates they will could encourage savings and if that is the case they have to make sure that people are still purchasing. An increase in interest rates could be detrimental to the economy if consumer confidence is not where it needs to be. It could result in slowed growth.
It is important the federal reserve closely follows international developments in the continuing recovery from 2008. Places like the EU and Russia have meager economic outlooks for 2015; even China just had its slowest year of growth in 25 years. If Yellen and the Fed decide to raise interest rates while foreign countries continue to have economic troubles, the US could again see itself slip into a recession.
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