Decision Time: Fed Torn Over Inflation And Economic Outlook
The Fed loves to keep us guessing. It looks like this time it will keep short-term interest rates steady, leaving the timing of future interest rate hikes open-ended as it prepares for its policy meeting next week.
Instead of going forward with four hikes this year as planned, Fed chair Janet Yellen may pause on planned rate hikes and give the central bank flexibility to raise rates in April or June, contingent on the economy performing well, the Wall Street Journal reports.
Fed officials are also trying to make sense of mixed signals on inflation, which has been running below the Fed’s 2% goal for almost four years. Back in January, officials disagreed about whether hiring and inflation were at risk of falling short of of expectations. In addition, market expectations for rate increases have lowered since the Fed met in December.
Some officials—like San Fran Fed CEO John Williams (pictured)—believe interest rate hikes should continue as planned, saying the big picture hasn’t fundamentally changed, while others urge caution until the economic outlook becomes clearer. Yellen is trying to make these two camps come to an agreement. Luckily for her, she has until next Wednesday. [WSJ]
