Fed to hike interest rates as Trump tax cut looms


The US central bank is set to raise the benchmark interest rate this week, looking to move ahead of price increases that, though absent up to now, should still materialize.

It would be the third rate hike this year, expected by economists and traders, and hinted at by policymakers, even though official data show that inflation remains well below the two percent target of the Federal Reserve.

As the world 's largest economy grows and approaches full employment – confirmed by a solid jobs report in November – the central bank has long been waiting to see signs of "a job". inflation in the pipeline.

And now, a Republican plan nearing congressional approval to cut corporate taxes offers potential to the economy that could push the Fed to raise rates faster, economists say.

The Fed's September forecast indicated that three rate hikes were likely next year, but any increase in anxiety about fiscal policy and its impact on inflation could be reflected in the revised projections of policy makers published this week. ]

Since the Federal Open Market Committee on Rates met six weeks ago, economic data have shown distortions caused by multiple hurricanes at the end of the year. summer, including rebounds in residential and industrial construction.

And a key measure of consumer inflation posted its first rise in nine months in October, but partly because of the cost of hotels and accommodation, which has increased as people were leaving Hurricanes Harvey and Irma.

The latest Fed's National Economic Survey also contained reports on price hikes and worker compensation – something the central bank is watching closely.

But the underlying trends have not changed much: an economy buzzing at nearly three percent quarterly growth, robust job creations but slowing and record unemployment, accompanied by 39, low inflation and slow wage gains.

The absence of inflation has puzzled Fed officials and leads to a split between those who want to go slowly, and those who want to walk faster before price increases do not affect them. ;economy.



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