Page 25 - ARUBA TODAY

BUSINESS Wednesday 15 March 2017
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3 things to watch for from the Federal Reserve on Wednesday

before raising rates again erate its pace of rate hikes. that rates will still be at his-
in December last year. Along with economic torically low levels. For con-
But in recent weeks, the forecasts, the Fed releas- sumers and businesses, that
view has taken hold, with- es what has come to be means that while loan rates
in and outside the Fed, called the “dot plot.” This will rise, they will remain rel-
that the U.S. economy has is an illustrated plot of dots, atively low.
entered a new, stronger representing the expecta- Yellen is sure to be asked for
phase, with a job market tions for each official for her views of the policies be-
near full health, rising con- the path of the federal ing pursued by the Trump
sumer and business con- funds rate, the Fed’s key administration. The presi-
fidence, a sturdy housing policy rate. In December, dent has vowed to double
market and inflation mov- the Fed raised that rate to the economy’s growth rate
ing closer to the Fed’s 2 a range of 0.5 percent to to 4 percent from around
percent target. Nearly 0.75 percent, still quite low 2 percent over the past
eight years after the Great by historical standards. nearly eight years. Trump
Federal Reserve Chair Janet Yellen testifies on Capitol Hill in Recession ended, the Fed officials stress that the has said his package of
Washington. Fed watchers appear buoyed by signs of a stron- economy seems less and dot plot is merely a projec- tax cuts, deregulation, a
ger economy than worried about whether slightly higher rates less to need the support of tion of where rates might tougher trade stance and
might slow growth. ultra-low borrowing rates. go and not at all a guaran- increased spending in such
(AP Photo/Andrew Harnik)
A robust February employ- tee. At December’s meet- areas as infrastructure can
MARTIN CRUTSINGER moved the central bank ment report issued on Fri- ing, the projection from achieve his growth goals.
AP Economics Writer closer to its goals for em- day — 235,000 added jobs, the dot plot was that the But if the Fed starts to be-
WASHINGTON (AP) — Send- ployment and inflation, the brisk pay growth and a dip Fed would raise rates three come concerned about
ing signals loud and clear, likelihood of a rate hike af- in the unemployment rate times in 2017. inflation pressures at a time
the Federal Reserve has left ter the Fed ends its latest to 4.7 percent — was seen when the economy is at full
little doubt that it will raise policy meeting Wednes- as the final major encour- YELLEN’S VIEW employment, an increase
interest rates Wednesday day shot from around 20 aging economic report the On Wednesday, as she in the pace of rate hikes
for the third time since De- percent to near 100 per- Fed needed to feel confi- does after four Fed meet- could make it harder for
cember 2015 to reflect a cent as estimated by fu- dent about announcing a ings each year, Yellen will Trump to achieve his goals.
consistently solid U.S econ- tures markets, according to rate increase. hold a news conference. While Trump was personally
omy. data tracked by the CME What the Fed says in its The Fed chair is likely to critical of Yellen during the
The rate increase will likely Group. statement Wednesday as- stress many of the points presidential campaign, ac-
go down as one of the Now, the guessing switches sessing the health of the she has made in recent cusing her of favoring low
most telegraphed ever, to how many times the Fed economy will be parsed for speeches: That while the rates to help the Demo-
given that several Fed offi- may raise rates during 2017 clues to its thinking about Fed is raising rates, the crats, he has been silent on
cials, including Chair Janet — whether three times, as the pace of future rate in- pace of the increases will the Fed since winning the
Yellen, each let it be known the market now expects, or creases. likely remain gradual and election. q
over the past two weeks perhaps as many as four.
that they felt it was time to Yet regardless of the an- FORECAST AND DOT PLOT
raise the Fed’s benchmark swer, the market seems far Four times each year, the
short-term rate. less nervous about the pros- Fed updates the econom-
Their string of likeminded pect of rate increases than ic and interest-rate fore-
comments surprised many it was in recent years. Inves- casts of the 17 members
investors, who had as- tors seem increasingly con- of its policy committee —
sumed that the Fed would fident that the U.S. econo- five board members (there
wait until probably June my is vigorous enough to are two vacancies) and 12
before raising rates again. withstand modestly higher regional bank presidents.
The thinking was that the borrowing rates. Each policymaker offers
Fed would want to see Here are three things to his or her own anonymous
whether President Donald watch for after the Fed’s forecast.
Trump’s ambitious eco- meeting ends: Investors and Fed watch-
nomic program of tax cuts, ers tend to scrutinize those
deregulation and higher STATE OF THE ECONOMY projections to determine
spending on the military The Fed has managed its whether they think the cen-
and infrastructure could control of interest rates with tral bank is growing more
pass Congress — and then exceeding caution, be- optimistic about growth,
assess how it might affect ginning with an initial hike unemployment and infla-
the economy. in December 2015, which tion. A shift in sentiment
But after the Fed officials ended seven years of re- toward greater optimism
each suggested that the cord-low rates near zero. It could indicate that the
economy’s gains had then waited an entire year Fed is preparing to accel-

US wholesale prices up just 0.3% in February

MARTIN CRUTSINGER The Labor Department said Over the past 12 months,
AP Economics Writer Tuesday that its producer wholesale prices are up 2.2
WASHINGTON (AP) — Infla- price index, which mea- percent, reflecting a steady
tion at the wholesale level sures inflation pressures be- rise in inflation as energy
rose at just half the rate in fore they reach consum- prices have increased. Just
February as the previous ers, increased 0.3 percent six months ago, the year-
month, as a surge in energy in February following a 0.6 over-year increase stood
prices slowed. percent rise in January. at zero.