As Fed meets, markets fixate on 2 words
A two-word change in the Federal Reserve’s post-meeting statement on Wednesday could drive speculation that the Fed will raise interest rates sooner in 2015 than investors expect.
Some economists predict policymakers will remove from its statement a long-standing assurance that a key short-term rate will likely stay near zero for a “considerable time” after a bond-buying program ends.
At a two-day meeting starting Tuesday, Fed policymakers are expected to continue to wind down the bond purchases.
Charles Plosser, head of the Philadelphia Fed, dissented from the Fed’s July statement, saying the Fed’s rate guidance “does not reflect the considerable economic progress that has been made” toward the Fed’s economic goals.
Also, bond futures prices show that markets expect the Fed to raise interest rates more gradually than Fed policymakers’ forecasts indicate.
Source: Usatoday
