Trump Mocks at Fed's New Possible Interest Rate Hike, Calls It 'Incredible'
- Author: Eleanor Harrison Dec 19, 2018,
Dec 19, 2018, 2:01
President Donald Trump on Monday urged the Federal Reserve not to raise interest rates, but Fed officials are widely expected to do so this week despite the president's ongoing public effort to dissuade the USA central bank from putting any brakes on the economy.
Charles Schwab Chief Investment Strategist Liz Ann Sonders on the outlook for Federal Reserve policy, the US economy and the state of the markets.
"For all we know, investors will be suspicious if the Fed backs off its gradual pace of rate hikes at Wednesday's meeting because it might indicate policy officials are anxious about the economic growth outlook", Rupkey said.
What analysts do expect from the Fed is the message that it plans to become more flexible in its rate decisions starting next year.
After maintaining interest rates at a historic low throughout most of the Obama administration, the Fed has increased the federal funds rate eight times since late 2015 to 2.25 percent from virtually zero. Their recommendation: cancel the December rate hike, as others have suggested.
World stocks stabilized Tuesday, with Wall Street expected to edge up after heavy losses the day before, as traders prepare for a likely interest rate hike by the Federal Reserve. However, considering just how dovish market pricing for 2019 is, the risks surrounding the dollar seem to be asymmetric, and skewed to the upside.
Behind the Fed's shifting policy is a global slowdown, a U.S.
Fed officials will conclude a two-day meeting Wednesday, and Wall Street traders predict almost an 80 percent chance the Fed raises rates a quarter point this week, setting them at a range of 2.25 percent to 2.5 percent. Investors will be looking for signs that the central bank realizes that the economy isn't going to grow as fast as it had thought, but that it's not going to slow too much-and that it realizes it is coming close to tightening the economy into a recession.
"Uncertainties about how the economy will perform next year have ballooned", said Sung Won Sohn, chief economist at SS Economics.
Nomura also raised red flags on the QT process, adding that liquidity is an worldwide concern since other central banks are also expected to tighten their QE programs.
The Fed has raised its benchmark interest rate three times this year.
President Trump on Monday slammed the Federal Reserve over interest rates.
Trump's Monday tweet was the result of Fed officials holding a two-day meeting that will conclude on Wednesday.
The Fed will conclude its final policy meeting of the year Wednesday.