Only one thing matters at Wednesday's Fed meeting

pulse

December 10, 2017 12:06 PM

The Federal Reserve is widely expected to raise rates at its December policy meeting, making what it signals about future increases more of the focus.

The Federal Reserve is widely expected to raise interest rates Wednesday, making what it signals about future increases more of the focus.
Fed officials are confident in the recovery, and are expected to stick to forecasts for another three or even four rate increases in 2018.
Low inflation, which has undershot the Fed's 2% target for several years and points to lingering economic weakness, is a key factor that could complicate the outlook.

Federal Reserve policy has become sufficiently predictable that Wednesday's interest-rate hike matters a lot less than any hints the central bank may give about the pace of rate increases next year and beyond.

A December rise in the federal funds rate to a range of 1.25% to 1.50% has long been baked into Wall Street estimates. Economists will therefore be paying closer attention to the Federal Open Market Committee’s (FOMC) policy statement, its latest economic forecasts and Janet Yellen's last press conference as the central bank chair.

Fed Governor Jerome Powell is set to replace Yellen when her term ends in February, and several remaining open seats on the Fed’s board are making it more difficult than usual for Fed watchers to gauge the future of monetary policy. In this context, the Fed’s often dismissed "dot-plot" of officials’ own estimates for future rate hikes could gain added importance.

Still, hurting the economy in order to save it seems like a curious approach.

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