Most analysts predict the U.S. central bank will boost interest rates slightly on Wednesday as the economy nears full employment and inflation rises modestly.
Leaders of the U.S. Federal Reserve are gathered in Washington through Wednesday to debate interest rate policy.
Experts at Moody’s Investor Service say the Fed will raise rates a quarter of a percent and predicts a couple of similar increases later this year. Moody’s says even with several increases, rates will still be low enough to encourage growth.
The Fed slashed the benchmark interest rate nearly to zero during the recession to bolster growth and fight unemployment. Many economists say declines in unemployment mean the economy no longer needs such help.
If officials keep interest rates too low for too long, they risk sparking an abrupt inflationary jump that could force the Fed to raise rates high and fast, disrupting the economy. Officials raise interest rates to cool the economy and fend off inflation. Overall, the Fed is trying to guide the economy toward full employment while keeping prices increases around two percent a year.
More evidence of economic strength was published Tuesday, as leaders of many of the largest U.S. companies raised their outlook for hiring, sales, and investment for the next six months. The Business Roundtable represents companies that employ 15 million people and generate $6 trillion in annual revenues.
These CEOs are eager to see promised cuts in taxes and regulation carried out in ways that help their businesses grow.