The U.S. Federal Reserve is expected to raise its benchmark interest rate by 50-basis points, or half a percentage point, today (December 14) and signal that it remains focused on lowering inflation back to its 2% target.
Economists say they expect Federal Reserve Chairman Jerome Powell to remain hawkish on inflation and reiterate that the central bank is not ready to give up its rate hiking cycle despite signs that consumer prices are beginning to fall from their highs seen earlier this year.
The central bank is also scheduled to release new forecasts for interest rates and the economy when it concludes a two-day meeting.
Federal Reserve officials have indicated that they would reduce the size of future interest rate hikes after four consecutive 75-basis point, or three-quarters of a percentage point, increases.
The U.S. central bank will no doubt be encouraged by the latest inflation data that showed consumer prices were 7.1% higher in November than a year ago, down from a 7.7% annualized increase in October.
Economists have said that the Federal Reserve’s forecast on where they see the terminal rate, or peak level, for the federal funds rate will be important information for economists and stock markets.
Federal Reserve officials are expected to raise their forecast for the terminal rate to 5% from 4.6% previously.
