America's central bank is poised to raise interest rates for the second time this year as policymakers take another step towards normalisation amid an improving economy.
The US Federal Reserve is expected to raise its federal funds target to between 1pc and 1.25pc, from 0.75pc to 1pc in just the fourth increase since the financial crisis.
Economists also expect policymakers to flesh out plans to reduce its $4.5 trillion (£3.5 trillion) balance sheet later this year alongside fresh forecasts for growth, jobs and inflation.
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The US unemployment rate fell to a 16-year low of 4.3pc in May, and analysts expect the Fed to nudge down its unemployment forecasts this Wednesday.
However, growth disappointed in the first three months of this year, and analysts believe slower pay growth will prompt the Fed to lower its inflation forecasts.
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Seth Carpenter, an economist at UBS, said softer inflation and retail sales data for May would not change the outcome for a June rate hike.
However, he added: “a softer-than-expected inflation report could put the September rate hike at risk and potentially change the tone of the Fed’s statement.”
Reference: The Telegraph
Read More: http://www.telegraph.co.
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