The Federal Reserve this week is expected to stand by tentative plans to raise interest rates this year despite recent action by its European counterpart that’s likely to further hold down U.S. inflation.
“I think they’re in wait-and-see mode, and they’re still sticking to their mid-2015 guidance,” says Michael Gapen, chief U.S. economist of Barclays Capital and former head of a Fed monetary policy division. Investors will be scouring the Fed’s post-meeting statement for any signals of a possible delay in the Fed’s timetable.
The Fed, which concludes its two-day meeting Wednesday, is looking to raise its benchmark short-term interest rate from near zero for the first time since the 2008 financial crisis amid an accelerating U.S. economy. But it’s hesitant to move too quickly because tumbling oil prices and a strong dollar are keeping annual inflation unusually low, at about 1%.