A year ago, U.S. Federal Reserve Chair Jerome Powell held a 'remarkably pos...
WASHINGTON - A year ago, U.S. Federal Reserve Chair Jerome Powell held a “remarkably positive outlook” for an economy enjoying a “historically rare” combination of good news including low unemployment, steady inflation and strong growth that were all expected to continue.
A headline decision to cut interest rates by a quarter of a percentage point is widely expected. More importantly, the Fed’s language and new economic projections will show how deeply a summer of trouble has been felt - from an intensifying U.S.-China trade war and the relaunch of crisis-style stimulus by the European Central Bank to a stream of weak manufacturing data that may hint at larger problems for the United States.
The U.S. Federal Open Market Committee meets on Tuesday and Wednesday, with a press conference by Powell scheduled to follow the release of the central bank’s statement. New projections issued Wednesday will show whether officials think things are getting worse, and how much further they think they need to go in terms of rate cuts or other steps to stay ahead of any developing problems.
In a rosy-hued speech in October, Powell detailed risks he thought the Fed faced at that point. They were of a conventional sort - an unexpected jump in inflation, for example, that might force the Fed to raise interest rates even faster to discourage spending and slow the pace of price increases.
Wage growth has continued, and “consumers remain the locomotive of the economy,” JP Morgan economist Michael Feroli said after retail sales jumped more than expected in August. “There is little reason to expect a near-term retrenchment,” as households benefit from a tight job market and, if the Fed cuts interest rates as anticipated, lower costs to fund home improvements or other large purchases.
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