WASHINGTON (AP) — The Federal Reserve is all but sure to keep interest rates on hold Wednesday — and for the foreseeable future — even as President Donald Trump keeps up his attacks on the Fed for not cutting rates.
The Fed will likely reiterate a message that has reassured consumers and investors since the start of the year: No rate hikes are likely anytime soon. The Fed’s low-rate policy is keeping borrowing costs down, helping boost stock prices and supporting an economy that’s growing steadily. And with inflation remaining tame, the Fed is seen as able to stay on the sidelines at least through this year.
Yet Trump insists the economy can do better, and to that end he is demanding what almost no mainstream economist would favor: Cutting rates further.
On Tuesday, Trump tweeted that the U.S. economy has “the potential to go up like a rocket” if the Fed would only slash rates and resume the emergency bond buying programs it unveiled after the Great Recession to ease long-term loan rates to stimulate spending and growth.
“Yes, we are doing very well at 3.2% GDP (growth in the first quarter), but with our wonderfully low inflation, we could be setting major records,” Trump tweeted on the first day of the Fed’s two-day policy meeting.
The central bank will disclose its policy decisions in a statement and in a news conference by Chairman Jerome Powell. Economists overwhelmingly expect no major change in its rate policy. The Fed raised rates four times last year but has indicated that it foresees no hikes at all this year.
“The Fed is in a sweet spot right now, with moderate growth and low inflation,” said Brian Bethune, an economics professor at Tufts University in Boston. “If growth were any stronger or inflation higher, the Fed would have no choice but to raise interest rates.
The brighter outlook marks a sharp rebound from the final months of 2018, when fears about a possible global recession and of further Fed rate increases had darkened the economic picture. Stock prices tumbled in the final quarter of the year, especially after the Fed in December not only raised rates for the fourth time in 2018 but signaled that it was likely to keep tightening credit this year.
Yet beginning in January, the Fed engineered an abrupt reversal, suggesting that it was finished raising rates for now and might even act this year to support rather than restrain the economy. In characterizing its stance, the Fed’s new watchword became “patient.” And investors have responded by delivering a major stock market rally...
