Fed creeps towards next phase in its fight against inflation
But investors are likely to focus less on what policymakers do Wednesday — and more on what they say about the future. Wall Street will closely watch whether Fed policymakers expect to make another interest rate increase before the end of the year or whether they are edging closer to the next phase in their fight against rapid inflation.
Central bankers have already raised interest rates to a range of 5.25%-5.5%, the highest level in 22 years.
By making it more expensive to borrow to buy a house or expand a business, they are trying to slow demand across the economy, making it harder for companies to charge more without losing customers and slowing price increases.
Officials predicted in their last quarterly economic forecast — released in June — that they were likely to make one more rate increase before the end of 2023. They have kept that possibility alive throughout the summer even as inflation has begun to fade meaningfully.
But key policymakers have sounded less intent on making another move in recent weeks.
Fed Chair Jerome Powell suggested in June that further adjustment was «likely.» More recently, including during a closely watched speech in August, he said policymakers could nudge rates up «if appropriate.»
Fed officials will release economic projections after their gathering this week, which takes place Tuesday and Wednesday, offering a fresh look at whether most policymakers still think one final rate increase is likely to be necessary. The projections will also show how officials are interpreting a confusing moment in the economy, when consumer spending has been stronger than many economists expected even as inflation has cooled down a bit more quickly.
Taken together, the revised forecasts, the Fed's
