(Repeats story from earlier on Wednesday)
WASHINGTON Dec 14 The Federal Reserve will
conclude its two-day policy meeting on Wednesday afternoon with
an interest rate increase all but assured and will issue new
forecasts assessing whether the economic outlook has changed
since the U.S. election.
The latest policy statement and projections are to be
released at 2 p.m. EST (1900 GMT) with a press conference by Fed
Chair Janet Yellen following at 2:30 p.m.
Markets are poised for the federal funds rate to rise to a
target range of between 0.5 and 0.75 percent from the current
range of 0.25-0.5 percent, where they have rested since the Fed
approved its last rate increase a year ago.
Of more significance is the backdrop of the meeting. After
years of the Fed fretting about low interest rates and weak
inflation, the weeks since Donald Trump's victory have seen both
bond yields and inflation expectations start to rise. The Dow
Jones industrial average is up more than 11 percent since the
Details of policymakers' new economic assessments, the first
since the election, will be dissected closely to see if
policymakers yet feel the arrival of the Trump administration
has shifted the economic outlook or poses a risk of greater
inflation. The president-elect has said he wants a major tax cut
and infrastructure spending program, even as the economy
approaches full employment and wages are rising.
"Inflation risks are more significant than they were three
months ago," when the policymakers issued their last forecasts,
sad Northern Trust chief economist Carl Tannenbaum. "Rates could
well rise more than anticipated."
Despite the changed circumstances, it is not certain the Fed
will budge on its assessments. The median forecast of
policymakers as of September was for two interest rate increases
in 2017, an outlook Tannenbaum and many analysts feel may remain
Trump has not yet taken office, and any proposals would have
to clear a Republican-controlled Congress that may be stricter
about increasing public debt than Trump. In recent public
appearances some Fed officials have said they see a chance
Trump's policies may force them to speed the pace of rate
increases, yet also said they are hesitant to change their
outlook before he shares more details.
"Investors who are looking for clarity may be disappointed,"
said David Donabedian, chief investment officer of Atlantic
Trust Private Wealth Management.
(Reporting by Howard Schneider; Editing by Andrea Ricci)