Fed could drop hints about whether they might hike short-term rates in June
Federal Reserve officials are unlikely to raise short-term interest rates at their meeting this week, but could drop hints about whether they might move at their next gathering in June.
Clues could lie in their assessment of whether the economy appears more likely to fare better or worse than their forecasts—the so-called balance of risks.
If their post-meeting statement Wednesday cites greater risks the economy will underperform, that would signal a reluctance to lift rates in June. On the other hand, if they see greater odds that the economy will do better than they expect, or if they say the risks are balanced, they might be more confident about considering a rate rise in June.
Fed Chairwoman Janet Yellen, in her most recent public remarks, on April 7, didn’t tip her hand on the issue. She said the U.S. economy is “on a solid course,” but added that “we’re suffering a drag from the global economy.”
The risk assessment is a closely watched feature of most Fed policy statements, but officials didn’t include it after their January and March meetings because they were split, according to minutes of those gatherings.
Minutes of the March meeting showed almost half of Fed officials saw greater risks the economy would grow more slowly than expected, while the rest saw the risks as balanced. More than half saw greater risks inflation would be slower than projected.
