Federal Reserve Likely to Keep Interest Rates Unchanged

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Federal Reserve Building
Close-up of Federal Reserve Building in Washington DC

With global financial markets on a mostly downward spiral this year, economists are saying the Federal Reserve is likely to keep interest-rates at their current levels as fed officials wraps up their two-day policy review meeting on Wednesday.

Federal Reserve chair Janet Yellen will not be holding a press conference after the meeting and officials will not be releasing any updated economic projections until its next meeting in March.

“If the Fed isn’t so dovish, it’s likely US yields will rise, and the dollar will strengthen,” said Masato Yanagiya in an interview with Bloomberg.  Yanagiya is the head of forex and money trading at Sumitomo Mitsui Banking.

When Federal Reserve officials raised a key interest rate in December, they stated that any rate increase in the future would be implemented gradually, bolstering expectations that the Federal Open Market Committee would keep rate unchanged in January.

Last month, the U.S. central bank hiked its federal funds rate by ¼ percentage point, its first increase in nearly 10 years.

Meanwhile, the dollar struggled on Wednesday as investors were looking at the fed policy review meeting for validation on whether bets on a single U.S. interest rate hike in 2016 are justified.

Two more central bank policy decisions are expected this week, with the Reserve Bank of New Zealand scheduled to announce its decision later, and the Bank of Japan’s policy statement slated for release on Friday.

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