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What to expect from the Fed’s meeting this week

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Via Fox Business

The Federal Reserve is widely expected to leave interest rates unchanged during its two-day meeting this week, as policymakers look to strike a balance between the U.S. better-than-expected GDP report last week and overarching fears about global economic growth.

Most economists anticipate the U.S. central bank will keep the benchmark federal funds rate at 2.25 percent to 2.5 percent.

“It’s going to be a little bit more non-event this time, as we sort of get used to what the more-patient Fed is going to look like here,” Michael Reynolds, the investment strategy officer at Glenmede, told FOX Business.

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At their last meeting, Fed policymakers signaled there would be no rate hikes for the remainder of 2019 in light of global economic and financial developments, as well as muted inflation. The move was a stark turn from the December meeting when Fed Chairman Jerome Powell suggested there could be as many as two hikes this year.

Most likely, the Fed will provide some additional insight into how they’re assessing the current economic backdrop amid some mixed signals.

“I think the Fed is going to recognize that, but take it in stride that there are sort of these continued risks in the economic outlook, whether it’s trade or a soft global outlook outside of the U.S. in particular,” Reynolds said. “The risks sort of seem a bit balanced, I would say.”

Although President Trump urged the Fed to cut rates this week, that’s unlikely to happen anytime soon with growth during the first quarter of 2019 coming in higher than 3 percent, according to LPL Research Chief Investment Strategist John Lynch.

“We see plenty of evidence that solid U.S. fundamentals are intact even as the global economy struggles with trade and political risks,” Lynch said. “We expect U.S. growth to stabilize and inflation to creep higher as these risks subside, which could eventually lead to more Fed tightening.”

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Powell will hold a press conference at 2:30 p.m. ET on Wednesday following the conclusion of the meeting.


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