The Federal Reserve is expected to raise interest rates by three-quarters of 1% percentage point for the fourth time in a row on Wednesday, while opening the door to a slower pace of policy tightening as it seeks to offset the risk of very high inflation against economic pressures.
U.S. central bank will announce its latest policy decision early Thursday morning with Fed chief Jerome Powell scheduled to elaborate on the details in a press conference half an hour later.
The Fed will not release new quarterly economic projections, making an update from Powell highly anticipated. Rising prices are a major concern frequently cited in public opinion polls and among investors and are also at the center of Republican criticism of the Biden administration ahead of next week's congressional elections.
Data since the Fed's policy meeting on September 20-21 have given some sense that inflation, which has been running at a 40-year high, is easing in a decisive manner. The job market on the other hand remains strong.
But some Fed policymakers have begun to voice concerns more openly that raising borrowing costs too aggressively could drive the economy into an unnecessary recession, noting that some surveys and private data show price pressures are starting to ease.
If Powell sets the stage for smaller rate hikes in the future, it will use language that tries to avoid any commitment and lean heavily on how the economy and inflation behave in the coming weeks.
The release on Tuesday of a report showing an unexpected surge in Private employment. According to Citibank analysts, "The strong data further increases the risk that any slowdown is linked to hawkish communication that base rates could rise longer and to higher terminal rates."
