Fed likely to pause, raise growth forecast

WASHINGTON – Analysts expect the US Federal Reserve to pause interest rate hikes on Wednesday as the central bank looks to tame inflation while avoiding a recession, despite a recent energy-fueled rise in consumer prices.

After 11 interest rate hikes since March last year, inflation has fallen sharply but remains stuck stubbornly above the Fed’s long-run target of two percent per year – keeping pressure on officials to consider further policy action.

Despite rising slightly due to increased energy costs, inflation remains well below last year’s peak, while economic growth remains robust and the unemployment rate sits close to record lows – raising hopes the Fed can slow price increases without triggering a downturn.

The decision by the interest rate-setting Federal Open Market Committee (FOMC) will be published at 2:00 pm (1800 GMT), along with updated economic forecasts.

The Fed’s rate decision will be followed half an hour later by a press conference with Fed chair Jerome Powell, which will be closely watched for hints on the path of future rate decisions.

“We look for the FOMC to keep its target range for the federal funds rate unchanged,” Wells Fargo economists wrote in a recent note to clients, adding that “most market participants” expected the Fed to hold rates steady.

That would leave the Fed’s key lending rate at its current range between 5.25 and 5.50 percent – a 22-year high.

Traders currently see it as 99 percent likely that the Fed will hold off on hiking interest rates on Wednesday, and a roughly 70 percent chance it will vote to do the same at the next FOMC meeting in November, according to data from CME Group.

Policymakers on the FOMC are looking to keep the country on what Chicago Fed president Austan