WASHINGTON: The US Federal Reserve is widely expected to raise its benchmark lending rate for a tenth - and possibly final - time on Wednesday (May 3), as it continues its fight against high inflation
The US central bank is likely to take this decision despite growing signs that the American economy is slowing down, with many economists predicting the US will enter a mild recession later this year.
More than 80 per cent of futures traders also expect the Fed to raise interest rates by another 25 basis points, according to data from CME Group.The meeting of the rate-setting Federal Open Markets Committee on May 2 and 3 will be held under very different circumstances than its previous one in March, which took place amid a short, sharp, banking crisis unleashed by the rapid collapse of Silicon Valley Bank a few days earlier.
"With stress in credit markets easing, Fed officials look set to push ahead with a 25bp rate hike at the early-May meeting," Oxford Economics' lead US economist Michael Pearce wrote in a recent note to clients. But he cautioned against"making such a judgment" before good data on the effect of the financial turmoil and bank lending was published.
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