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BUSINESS Tuesday 30 april 2019
A25

Fed likely to underscore a message: No rates hikes in 2019

By MARTIN CRUTSINGER that are expected to re-
Associated Press verse themselves. If so, this
WASHINGTON (AP) — The would diminish the pace
Federal Reserve this week of growth and likely hold
will likely reinforce a theme down inflation.
that has cheered consum- "We are still confronting a
ers and investors since the global slowdown, with 70%
start of the year: No interest of the global economy
rates hikes are likely any- slowing," said Diane Swonk,
time soon. chief economist at Grant
The prospect of continued Thornton.
low rates is keeping bor- Indeed, for all of 2019,
rowing costs low for house- growth is expected to total
holds and companies. It is around 2.2%, down from
helping drive record highs last year's 2.7% gain, as
in the stock market. It is sup- the effects of the 2017 tax
plying fuel for a U.S. econ- cuts and billions of dollars
omy that's growing steadily in increased government
but fairly modestly and until spending fade. At the same
recently was seen as fac- time, the Fed is still strug-
ing the risk of a recession. gling to achieve one of
And with inflation remain- In this March 20, 2019, file photo a screen on the floor of the New York Stock Exchange shows the its mandates: To produce
ing unusually mild, the Fed rate decision of the Federal Reserve. inflation of roughly 2%. On
is seen as able to stay on Associated Press Monday, the government
the sidelines through year's reported that the Fed's pre-
end and perhaps beyond. nomic picture. Stock prices growth prospects in Chi- ther rate hikes and perhaps ferred inflation gauge rose
The Fed will likely express tumbled in the final quarter na and some other ma- resume tightening credit? just 1.5% in March from 12
that belief in a statement of the year, especially af- jor economies and by the Possibly. But investors don't months earlier. Many ana-
when its latest policy meet- ter the Fed in December view that a trade war be- seem to think so. Accord- lysts say they think the Fed
ing ends Wednesday and not only raised rates for the tween the world's two big- ing to data tracked by the won't resume raising rates
in a news conference that fourth time in 2018 but sug- gest economies, the United CME Group, investors fore- until inflation hits or ex-
Chairman Jerome Powell gested that it was likely to States and China, is moving see zero probability that the ceeds its 2% target.
will hold afterward. keep tightening credit this closer to a resolution. Fed will raise rates anytime Too-low inflation is seen
"The Fed will recognize the year. On Friday, the govern- this year. And in fact, their as an obstacle because it
brighter economic outlook, Yet beginning in January, ment reported that the U.S. bets indicate a roughly 64% tends to depress consumer
but there will be no change the Fed engineered an economy grew at a surpris- likelihood that the Fed will spending, the economy's
at this meeting," said David abrupt reversal, suggest- ingly strong 3.2% annual cut rates before year's end. main fuel, as people delay
Jones, an economist and ing that it was finished rais- rate in the January-March One factor in that dovish purchases in anticipation
author of books about the ing rates for now and might quarter. It was the best per- view is that the economy of flat or even lower prices.
Fed. even act this year to sup- formance for a first quarter might not be quite as robust It also raise the inflation-ad-
The generally brighter view port rather than restrain the in four years, and it far sur- as the latest economic fig- justed cost of a loan.
of the economy and the economy. In characterizing passed initial forecasts that ures suggest. The first quar- "They will express concerns
stock market represents a its stance, the Fed's new annual growth could be as ter's healthy 3.2% annual about the low inflation
sharp rebound from the fi- watchword became "pa- weak as 1% at the start of growth rate was pumped numbers," Sung Won Sohn,
nal months of 2018, when tient." And investors have the year. up by some temporary finance and economics
concerns about a possible responded by delivering a If economic prospects factors — from a surge in professor at Loyola Mary-
global recession and fear major stock market rally. were to brighten further, restocking of companies' mount University in Los An-
of further Fed rate increas- The market gains have could Fed officials rethink inventories to a narrowing geles, predicts of Fed offi-
es had darkened the eco- also been fed by improved their plans to suspend fur- of the U.S. trade deficit — cials this week.q