U.S. Fed likely to keep policy interest rates unchanged next week

The U.S. Fed is set to meet next week for its policy meeting. According to a Lloyds Bank research report, the U.S. Federal Reserve is expected to keep its policy interest rates unchanged. The economic data for the nation have greatly surprised on the upside since the Fed last hiked rates in December, while the passage of a tax reform bill might be seen as an additional reason for another rate rise.

However, the action is not expected at this stage as having hiked rates only slight more than a month ago the Fed will probably now be happy to wait before acting again, noted Lloyds Bank. Several FOMC members have argued that with inflation still running below the Fed’s target, the FOMC can be “patient”.

Nevertheless, there might just be a brief delay before the Fed hikes interest rates again. The FOMC has been arguing for some time that they anticipate economic conditions “will warrant gradual rises” in policy rates and the forecast of a majority of members in December was for three U.S. policy rate hikes in 2018.

“We think that the FOMC is likely to deliver a 0.25 percent increase at its next meeting on 21st March and follow up with two further rises later in the year”, added Lloyds Bank.

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