Friday, May 25, 2018
Business

Federal Reserve unlikely to change interest rates

WASHINGTON — The Federal Reserve is all but sure to leave interest rates alone when it ends a policy meeting Wednesday at a time of steady gains for the U.S. economy but also heightened uncertainty surrounding the new Trump administration.

The Fed will likely signal that it wants further time to monitor the progress of the economy and that it still envisions a gradual pace of rate increases ahead.

"I don't look for the Fed to do anything this week," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University. "They are starting to get their ducks in a row for further rate hikes, but it will be too soon to pull the trigger."

The Fed's two-day meeting will end with a policy statement that will be studied for any signals of its outlook or intentions. At the moment, most economists foresee no rate increase even at the Fed's next meeting in March, especially given the unknowns about how President Donald Trump's ambitious agenda will fare or whether his drive to cancel or rewrite trade deals will slow the economy or unsettle investors.

It's always possible that the central bank could surprise Fed watchers Wednesday by sending a signal that a rate hike is coming soon. In Fed parlance, that signal could be as slight as changing language in its statement to say "near-term risks to the economic outlook appear in balance," instead of "roughly in balance," the phrase it has been using.

The statement will not be accompanied by updates to the Fed's economic forecasts or by a news conference with Chair Janet Yellen, both of which occur four times a year .

Last month, the Fed modestly raised its benchmark short-term rate for the first time since December 2015, when it had raised it after keeping the rate at a record low near zero for seven years. The Fed had driven down its key rate to help rescue the banking system and energize the economy after the 2008 financial crisis and the Great Recession.

When it raised rates last month, the Fed indicated that it expected to do so three more times in 2017. Yet confusion and a lack of details over what exactly Trump's stimulus program will look like, whether he will succeed in getting it through Congress and what impact it might have on the economy have muddied the outlook.

And while Trump's tax and spending plans are raising hopes for faster growth, his proposals to impose tariffs on such countries as China and Mexico to correct trade imbalances could slow the economy if U.S. trading partners retaliate and collectively impede the flow of imports and exports.

"The Fed is unlikely to signal intentions to raise rates as early as March given the heightened uncertainty about the timing and scope of fiscal and protectionist policies," said Sal Guatieri, senior economist at BMO Capital Markets.

Nariman Behravesh, chief economist at IHS Markit, predicts that the economy will grow a modest 2 percent to 2.5 percent this year, before accelerating next year to 2.6 percent to 2.7 percent on the assumption that Trump's policy proposals will have begun to take full effect by then.

The outlook for both years would mark an improvement over the economy's lackluster growth of 1.6 percent in 2016, its weakest performance since 2011.

Even though economic growth, as measured by the gross domestic product, was underwhelming last year, the job market appears close to full health. Hiring was consistently solid in 2016, and the unemployment rate ended the year at 4.7 percent, just below the 4.8 percent level the Fed has identified as representing full employment.

And inflation, by the Fed's preferred measure, rose 1.6 percent in the 12 months that ended in December, moving closer to the Fed's 2 percent goal.

Comments
Five members of 69ers motorcycle gang indicted on federal charges

Five members of 69ers motorcycle gang indicted on federal charges

Last year three members of the 69ers Motorcycle Club gang were implicated in the execution of a rival gang leader in the middle of rush hour traffic in Pasco County.Now those three and two other 69ers members have been indicted on federal charges tha...
Updated: 6 hours ago
With makeover, ZooTampa at Lowry Park takes a page from the theme parks

With makeover, ZooTampa at Lowry Park takes a page from the theme parks

TAMPA — Behind the construction walls near the carousel at ZooTampa at Lowry Park, hammers, saws and power drills made a racket in the blazing Friday heat. A raft full of 100-pound water jugs took test trips on the new Roaring Springs ride set ...
Updated: 7 hours ago
U.S. news outlets block European readers over new privacy rules

U.S. news outlets block European readers over new privacy rules

LONDON ó U.S. news outlets including The Chicago Tribune, The Los Angeles Times, The Orlando Sentinel and The Arizona Daily Star abruptly blocked access to their websites from Europe on Friday, choosing to black out readers rather than comply with a ...
Updated: 11 hours ago
Tampa Electric appeals OSHA findings for October accident

Tampa Electric appeals OSHA findings for October accident

TAMPA ó Tampa Electric Co. is appealing a recent citation by federal regulators. The Occupational Safety and Health Administration hit the utility with a $76,050 fine and a "serious" violation in April following its investigation into an accident in ...
Updated: 11 hours ago
Fiat Chrysler recalls 4.8 million cars, warning owners: Donít use the cruise control

Fiat Chrysler recalls 4.8 million cars, warning owners: Donít use the cruise control

Associated PressDETROIT ó Fiat Chrysler is recalling 4.8 million vehicles in the U.S. because in rare but terrifying circumstances, drivers may not be able to turn off the cruise control. The company is warning owners not to use cruise control until...
Published: 05/25/18
Federal Reserve chairman warns his agency must be free from political pressure

Federal Reserve chairman warns his agency must be free from political pressure

Associated PressFederal Reserve Chairman Jerome Powell warned Friday that the Fedís independence from political pressure must be respected if it is to succeed in controlling inflation, maximizing employment and regulating the financial system. His re...
Published: 05/25/18
Restaurants like Ford’s Garage use the experience to get you in the door

Restaurants like Ford’s Garage use the experience to get you in the door

Tim Butler’s first car was a Ford Model A pick-up truck — a pearl fawn and cherry red pick-up he got his senior year in high school from his dad, who renovates antique cars. That’s why as Butler waited for a table at the Ford’...
Published: 05/25/18
St. Petersburg man fined $507,513 in penny stock scheme

St. Petersburg man fined $507,513 in penny stock scheme

TAMPA ó A St. Petersburg man was fined $507,513 and permanently barred from participating in the offering of a penny stock in a case involving a scheme to manipulate the price of Aureus, a penny stock company incorporated in Nevada, officials said Fr...
Published: 05/25/18
Broadcomís CEO tops highest-paid list with a $103 million payout

Broadcomís CEO tops highest-paid list with a $103 million payout

Times staff and wiresNEW YORK ó Chief executives at the biggest public companies got an 8.5 percent raise last year, bringing the median pay package for CEOs to $11.7 million. Across the S&P 500, compensation for CEOs is often hundreds of times highe...
Published: 05/25/18
Denis Phillips, hurricane season guru, talks his signature beer, suspenders and Rule #7

Denis Phillips, hurricane season guru, talks his signature beer, suspenders and Rule #7

SAFETY HARBOR ó Denis Phillips cracks a pop-top and pulls a can that looks a lot like him to his lips."Itís got that citrusy feel to it," he says. "Which is a Florida thing. Thatís not bad." Indeed, thereís a grapefruit finish to Rule #7 Hurricane Sa...
Published: 05/25/18