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WHATINGTON - When the Federal Reserve concludes its last session, it will probably point to buoyant GDP expansion, low levels of joblessness and increasing levels of Inflation as grounds to remain on a course of gradual interest rate hikes. However, it is unlikely that interest rate hikes will take place on Wednesday. In the Fed's explanation, possible dangers from increasing trading spreads could also be discussed.
However, it is almost certain that the declaration will not recognise the recent criticisms made by President Donald Trump to the Federal Reserve. In March and June of this year, the Fed already increased interest twice. He signalled at the June session that he expects he will increase it two more time in 2018.
A lot of respondents believe that these migrations will take place in September and December. Following the interest rate increases in March and June, there were three in 2017 and one each in 2015 and 2016. Now the Fed base rate is still at a relatively low 1.75 to 2 per cent. However, it is up from the all-time low near zero where it stayed for seven years as the Federal Reserve worked to use extremely low interest rates to raise the economy out of the Great Depression.
This series of quarterly point rate rises is designed to avoid the economic situation becoming overheated and to avoid excessive rises in headline rates. As Trump has made clear, he has little time for the Fed's attempts to hold the economies back from controlling rate of increase. "Retightening now hurt everything we've done," Trump was tweeting last week, a days after he said in a TV broadcast that he was "not happy" with the Fed's rate rises.
This is because it could lead to even quicker interest rate increases if the Federal Reserve wants to persuade the finance market that it will not give in to policy pressures and that it will raise headline inflation to alarming heights. According to Trump's commentary, Finance Minister Steven Mnuchin tried to make a calming comment that the White House does not want to disrupt the Fed's policy.
Currently, the economy is growing strongly and is increasing at an average rate of 4.1 per cent a year in the April-June period, the best result in almost four years. Joblessness is at a low 4 per cent, and some economists believe it will continue to decline when the authorities release the July numbers on Friday.
However, there are also concerns, spearheaded by the fear of what a trump-driven commercial battle could mean for US and global economic expansion. A lot of psychiatrists believe that the potential damage from increasing customs duties was a central issue of debate this weekend, even though it may not appear in the Fed's declaration of principle.
Powell delivered the Fed's semi-annual congressional review last week and did not criticise the Trump administration's efforts to use the tariff threats to try to lower tariffs. However, Powell noted that the Fed heard from commercial outlets a "rising choir of concern" about the damage a commercial conflict could cause.
Powerell has not openly raised Trump's criticisms of Fed rate increases. However, the Chair had previously said in a broadcast intervention that the Federal Reserve has long acted autonomously to make interest rate policy on the basis of what is best for the business community rather than in reaction to policy pressures.