The Federal Reserve is set to cut its benchmark interest rate Wednesday for a third time this year to help sustain the U.S. economic expansion in the face of widespread trade tensions and slower global growth.But the Fed's policymakers will likely frustrate anyone who is hoping for a clear signal about what they may do next. The central bank may prefer instead to keep its options open, economists say.Analysts have forecast that the Fed will reduce the short-term rate it controls - which influences a broad range of consumer and business loans - by one-quarter percentage point year to a range of 1.5 percent to 1.75 percent. A third cut would nearly reverse the four rate hikes that the Fed made last year in response to a strengthening economy.That was before rising global risks led the Fed to change course and begin easing credit. Lower rates are intended to encourage more borrowing and spending. The Federal Reserve is set to cut its benchmark interest rate Wednesday for a third time this year to help sustain the U.S. economic expansion in the face of widespread trade tensions and slower global growth Chairman Jerome Powell has said that the central bank's rate reductions are intended as a kind of insurance against threats to the economy, notably from President Donald Trump's trade war with China and weaker growth in Europe and Asia. Powell has pointed to similar rate cuts in 1995 and 1998 as precedents; in both cases, the Fed cut rates three times.The key issue at this week's meeting is whether the Fed has taken out enough insurance. Powell and most other Fed officials credit their rate cuts with lowering mortgage rates, boosting home sales and generally keeping the economy on track.The Fed will also consider the consequences of a decline in expectations for inflation. Lower inflation expectations can be self-fulfilling. That represents a problem for the Fed because its preferred inflation gauge has been stuck below its 2 percent target for most of the past seven years.In the meantime, Trump, via Twitter, has renewed his attacks on the Fed for not lowering its benchmark rate closer to zero. RELATED ARTICLES Previous 1 Next Purple Heart-winning colonel tells Congress during 10-hour... Trump and Melania are BOOED by crowd chanting 'lock him up'... Share this article Share Trump has contrasted the Fed's actions unfavorably with central banks in Europe and Japan, which have slashed their rates into negative territory.Though Trump has suggested that this puts the United States at a competitive disadvantage, most economists regard negative interest rates as a sign of weakness.Some international tensions have eased since the Fed's last meeting in mid-September, which might suggest that further rate cuts are less necessary. The U.S. and China reached a temporary trade truce earlier this month and are working on a preliminary agreement that could be signed by Trump and President Xi Jinping in November.It's not clear, though, how meaningful any
Fed is expected to cut rates but may offer little guidance
The Federal Reserve is set to cut its benchmark interest rate Wednesday for a third time this year to help sustain the U.S. economic expansion in the face of widespread trade tensions and slower global growth.But the Fed's policymakers will likely frustrate anyone who is hoping for a clear signal about what they may do next. The central bank may prefer instead to keep its options open, economists say.Analysts have forecast that the Fed will reduce the short-term rate it controls - which influences a broad range of consumer and business loans - by one-quarter percentage point year to a range of 1.5 percent to 1.75 percent. A third cut would nearly reverse the four rate hikes that the Fed made last year in response to a strengthening economy.That was before rising global risks led the Fed to change course and begin easing credit. Lower rates are intended to encourage more borrowing and spending. The Federal Reserve is set to cut its benchmark interest rate Wednesday for a third time this year to help sustain the U.S. economic expansion in the face of widespread trade tensions and slower global growth Chairman Jerome Powell has said that the central bank's rate reductions are intended as a kind of insurance against threats to the economy, notably from President Donald Trump's trade war with China and weaker growth in Europe and Asia. Powell has pointed to similar rate cuts in 1995 and 1998 as precedents; in both cases, the Fed cut rates three times.The key issue at this week's meeting is whether the Fed has taken out enough insurance. Powell and most other Fed officials credit their rate cuts with lowering mortgage rates, boosting home sales and generally keeping the economy on track.The Fed will also consider the consequences of a decline in expectations for inflation. Lower inflation expectations can be self-fulfilling. That represents a problem for the Fed because its preferred inflation gauge has been stuck below its 2 percent target for most of the past seven years.In the meantime, Trump, via Twitter, has renewed his attacks on the Fed for not lowering its benchmark rate closer to zero. RELATED ARTICLES Previous 1 Next Purple Heart-winning colonel tells Congress during 10-hour... Trump and Melania are BOOED by crowd chanting 'lock him up'... Share this article Share Trump has contrasted the Fed's actions unfavorably with central banks in Europe and Japan, which have slashed their rates into negative territory.Though Trump has suggested that this puts the United States at a competitive disadvantage, most economists regard negative interest rates as a sign of weakness.Some international tensions have eased since the Fed's last meeting in mid-September, which might suggest that further rate cuts are less necessary. The U.S. and China reached a temporary trade truce earlier this month and are working on a preliminary agreement that could be signed by Trump and President Xi Jinping in November.It's not clear, though, how meaningful any
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