us fed to hike interest rates
Last Updated : GMT 05:17:37
Emiratesvoice, emirates voice
Emiratesvoice, emirates voice
Last Updated : GMT 05:17:37
Emiratesvoice, emirates voice

As Trump tax cut looms

US Fed to hike interest rates

Emiratesvoice, emirates voice

Emiratesvoice, emirates voice US Fed to hike interest rates

With the world's largest economy growing and near full employment
Washington - AFP

The US central bank is set to raise the benchmark interest rate this week, looking to get ahead of price increases that, though absent so far, are still expected to materialize.

It would be the third rate hike this year, and is overwhelmingly expected by economists and traders, and hinted at by policymakers, even though official data show inflation remains well below the Federal Reserve's two percent target.

With the world's largest economy growing and near full employment -- confirmed by a strong November jobs report on Friday -- the central bank has long been expecting to see signs of inflation in the pipeline.

And now a Republican plan nearing approval in Congress to slash corporate taxes offers a potential juice to the economy that could prompt the Fed to hike rates faster, economists say.

The Fed's forecast in September indicated three rate hikes were likely next year, but any increase in anxiety over fiscal policy and its impact on inflation could be reflected in the revised projections from policymakers that will be released at this week's meeting.

Since the rate-setting Federal Open Market Committee last met six weeks ago, economic data have seen ripples of distortion from the multiple hurricanes of late summer, including rebounds in home construction and industrial output, for example.

And a key measure of consumer inflation posted its first gain in nine months in October -- though this was partly driven by the cost of hotels and lodging, which rose as people left home to flee Hurricanes Harvey and Irma.

The Fed's latest nationwide survey of the economy also contained reports of rising prices and worker pay -- just the thing the central bank watches closely.

But the underlying trends have not changed much: an economy humming along at near three percent quarterly growth, robust-but-slowing job creation and record low unemployment, accompanied by weak inflation and sluggish wage gains.

The absence of inflation has baffled Fed officials and led to a split among those who want to go slow, and those who want to hike more quickly before price increases hit the economy.

Fed governor Jerome Powell, President Donald Trump's pick to lead the central bank starting in February, testified last month that the case for a rate hike was "coming together," in an unusually strong hint about the likely move this week.

But Chicago Federal Reserve Bank President Charles Evans, currently a voting member of the FOMC, questioned the need to raise rates again so soon, and said the central bank could simply sit on its hands "until the middle of next year." 

 

- Below three percent, impossible? -

 

How a massive tax cut that slashes corporate tax rates to 20 percent from 35 percent might change the outlook for the economy and inflation remains unclear as estimates vary widely. Much depends on the final details and when they take effect.

According to economists at Goldman Sachs, the version of the tax bill adopted by the Senate could boost growth by 0.3 percentage points over the next two years -- before turning flat or even negative the following year.

Ian Shepherdson of Pantheon Macroeconomics said tax cuts at full employment "make no sense" and could drive the unemployment rate to three percent.

"You might think that's impossible," he said in a client note, "but note that 108 metro areas... already had sub 3.5 percent unemployment rates in September."

But economist Diane Swonk said the plan was not likely to change the Fed's path all that much since most analysts say the tax cuts will favor the wealthy.

"We know the economic effects are smaller... which doesn't make or break your monetary policy," she told AFP.

Policymakers are also likely to wait until the tax plan is adopted before baking it into their economic forecasts, she added.

Jared Bernstein, who served as economic advisor to former Vice President Joe Biden, said faster growth or even lower unemployment due to the tax cuts would produce a predictable reaction from the central bank.

"If they smell any fire, they'll raise rates faster than they would have otherwise," he told AFP

GMT 06:55 2017 Friday ,29 December

US, South Korea to hold trade talks

GMT 06:34 2017 Wednesday ,06 December

US hits Vietnam with huge duties on steel

GMT 07:18 2017 Thursday ,23 November

US durable goods fall in October

GMT 06:57 2017 Thursday ,23 November

'Many' Fed members favor near

GMT 07:21 2017 Wednesday ,22 November

US slaps import duties on Spanish olives
Emiratesvoice, emirates voice
Emiratesvoice, emirates voice

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

us fed to hike interest rates us fed to hike interest rates

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

us fed to hike interest rates us fed to hike interest rates

 



GMT 10:31 2014 Tuesday ,23 December

Mirages of failure: Lebanon cannot wait

GMT 16:17 2018 Thursday ,30 August

Five Saudi women pilots granted GACA licences

GMT 05:38 2017 Tuesday ,05 September

Serious need for progress in the peace process

GMT 00:18 2017 Wednesday ,22 February

Mugabe marks 93rd birthday with faltering TV interview

GMT 12:48 2017 Tuesday ,09 May

King, Egyptian president hold talks

GMT 18:03 2017 Friday ,17 November

HH Sheikha Moza Witnesses Opening of 2017 WISE Summit

GMT 07:18 2017 Monday ,19 June

ARC Secretary General Najla Al Shamsi in Riyadh

GMT 08:18 2013 Thursday ,31 October

\'Early medication for HIV is cost-effective\'

GMT 19:23 2017 Monday ,23 January

80 Houthi Militants Killed in Airstrikes

GMT 22:44 2017 Friday ,21 July

HM King ratifies, issues 4 laws

GMT 13:34 2016 Saturday ,29 October

Biden ‘tops Clinton list for secretary of state’

GMT 20:00 2017 Saturday ,15 July

Bahrain condemns terrorist attack in Giza

GMT 09:20 2017 Wednesday ,05 July

Mohamed bin Zayed receives phone call

GMT 14:18 2012 Sunday ,13 May

Why some men hide in bathrooms

GMT 12:26 2012 Thursday ,28 June

Pakistan releases Indian spy

GMT 20:33 2013 Friday ,09 August

New menswear brand Pin Collar Shirts launches

GMT 13:43 2013 Wednesday ,06 November

Urban Retreat announces launch of debut skincare line

GMT 15:59 2017 Wednesday ,13 September

Nahyan bin Zayed, Abdullah bin Hamad offer condolences

GMT 09:47 2017 Wednesday ,29 November

UAE has what it takes to become the future capital

GMT 18:14 2017 Friday ,03 March

The Moroccan artist Hakim prepares new song
Emiratesvoice, emirates voice
 
 Emirates Voice Facebook,emirates voice facebook  Emirates Voice Twitter,emirates voice twitter Emirates Voice Rss,emirates voice rss  Emirates Voice Youtube,emirates voice youtube  Emirates Voice Youtube,emirates voice youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

emiratesvoieen emiratesvoiceen emiratesvoiceen emiratesvoiceen
emiratesvoice emiratesvoice emiratesvoice
emiratesvoice
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
emiratesvoice, Emiratesvoice, Emiratesvoice