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Fed: Interest rate hikes may wait if inflation slows

 

WASHINGTON – July 13, 2017 – Federal Reserve Chairwoman Janet Yellen, faced with a recent, puzzling slowdown in global inflation, said she expects the forces holding down consumer prices to fade in the months ahead, allowing the central bank to stick to its plans for gradual interest-rate increases.

However, Yellen left herself an out: She said the Fed could veer from its policy plans to keep raising interest rates if inflation weakness proves more stubborn than officials expect.

Markets increasingly expect the Fed to next raise rates in December after launching the process of slowly shrinking its $4.5 trillion portfolio of bonds and other assets acquired during and after the financial crisis in September.

Fed officials next meet July 25-26. At their meeting last month, they raised short-term interest rates for the third time in as many quarters to a range between 1 percent and 1.25 percent, and penciled in one more increase this year.

Source: Wall Street Journal (07/13/17) Timiraos, Nick

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Related Topics: Interest rates