WASHINGTON: In the six weeks since a confident US Federal Reserve raised interest rates in response to a “strong” US economy, consumer confidence dropped, wholesale prices weakened, financial markets wobbled and home sales fell.
Further afield, China tried to boost lending for its slowing economy, the European Central Bank acknowledged ebbing growth in the euro zone, and the International Monetary Fund cut its world economic growth forecast and warned that global trade had nosedived as major nations squabbled about tariffs.
As they conclude their latest two-day policy meeting on Wednesday, Fed policymakers will have to decide how big a risk all of that poses to the near-decade-long US economic expansion.
Their task is made more difficult by the delayed release of key economic data due to the recent 35-day partial shutdown of the US government, including important reports on retail sales and gross domestic product.
Fed officials are “clearly sounding as if they are pausing ... They don’t know exactly what’s happened to the economy because the data hasn’t been coming through,” said Melanie Baker, senior economist at Royal London Asset Management. The US central bank was scheduled to release its latest policy statement later in the day, with investors widely expecting it to leave its benchmark overnight lending rate unchanged in a target range of 2.25 per cent to 2.5pc.
Fed Chairman Jerome Powell is due to hold a press conference shortly after the statement’s release.
Published in Dawn, January 31st, 2019